“We need to change the rules of the game” to make the credit card business more transparent, fairer and simpler for consumers, Geithner told reporters after the meeting at the Treasury Department. “This administration and this Congress are committed to changing the system.”

Reuters also reporting good news:

President Barack Obama will sign wide-ranging, pro-consumer credit card reforms into law by late May, senior U.S. House Democrat Carolyn Maloney predicted on Wednesday.

© RegulateNow for ChangeinTerms.com, 2009. | Permalink | 5 comments | Add to del.icio.us
Post tags: consumer credit, consumers, credit, regulation

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As we know, credit card companies are supposedly overseen by the OCC.  However, when complaining to the card issuer directly, the response that customers often receive is either condescension, laughter, or an answer that is strikingly similar to our current President’s campaign slogan, “YES WE CAN.”  This means that for all intents and purposes, credit card companies are not regulated by anyone. 

Thus, cardholders are regularly sent notices about changes that are too astounding to “believe in,” and find that they have no real recourse through any regulatory agency.  (I note that according to some stories I have observed, card company representatives seem to have no sense of fear whatsoever when a customer threatens to go to the OCC, and this threat may even invoke laughter — so much for the myth of oversight.)

This does not mean that no recourse whatsoever exists.  De-marketing is a very effective tool, even though it may take time.  And having no other choice, this has been my strategy in mounting a resistance to a Goliath such as Chase.  I would remind any reader that Chase “drew first blood.”  Chase finally pushed me way too hard, and crossed a line with its bullying of account holders that I simply refused to accept. I am now fighting for all account holders: 

If Chase wants peace, it can issue a press release.

Surrender terms include the demand that Chase must take back its egregious change in terms in its entirety, restoring every account holder to his or her previous condition – even the ones who “agreed at gunpoint” to give up their previously promised promotional rates; I also want an apology for defaming us (this isn’t all; read the linked post for more discussion).

With the above in mind, I find it interesting that according to a recently released report from a PEW Charitable Trust study entitled, “SAFE CREDIT CARD STANDARDS: Policy Recommendations for Protecting Credit Cardholders and Promoting a Functional Marketplace,” 100 percent of the credit cards it reviewed “allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.”  The study’s assessment covered general purpose consumer credit cards from the largest 12 issuers (which control more than 88 percent of outstanding credit card debt in America), as of December, 2008. 

The purpose of the study (undertaken in partnership with the Sandler Foundation) was to “address growing concerns about abuses in the credit card industry.”  Accordingly, since the purpose of the ChangeInTerms.com site is to end the abusive treatment of account holders by credit card companies, I’m glad to see such a noteworthy organization take an interest in these abuses. 

Not that the PEW researchers contacted me, but I also feel vindicated in knowing that it too found “the overwhelming majority of credit cardholders are vulnerable to unfair and deceptive practices.”  For instance, “in a one-year period between 2007 and 2008, issuers used these powers to raise interest rates on nearly one quarter of cardholder accounts.”  These interest rate increases affected “approximately 70 million accounts” and generated “at least $10 billion in additional interest charges” for the banks from customers who were expecting to receive the deal the credit card companies promoted, which was altogether different.

The OCC appears to be impotent, and I expect this may be mostly because of what appears to be a very bank-friendly disposition on the part of Comptroller of the Currency Dugan.  He has stated that ”defining, prohibiting, or restricting particular product terms” is a “slippery slope” (see page 8 of the linked statement) that should be avoided.  He did go on to recommend opt outs, but “oops,” Chase did not provide one relative to its outrageously abusive change in terms issued in November, 2008 (which has been the subject of much discussion here).

In other words, regardless of an extraordinary range of ever-more egregious acts of abusiveness, let’s allow the banks to continue imposing “we can do as we damn well please terms” on account holders (and be smug about it — operating with impunity as they have been doing).   

The new FED rules against “unfair and deceptive” practices do not take affect soon enough (Chase wanted 18 months to comply with the new Regulation Z rules, but it thought its customers should only need 15 days to comply with its new rules).  Until then, banks like Chase seem intent on stepping-up the pace of these practices, effectively engaging in legalized loan-sharking, completely unfettered by any meaningful regulation. 

Banks’ recent behavior could be likened to a boxing match, when after the bell is rung they’re getting in a few more below-the-belt punches, mercilessly beating consumers (and small business owners).  No one seems to be talking about this, but even after the new rules kick in, enforcement will be necessary – it takes both laws and the enforcement of those laws for the rule of law to have any meaning.

In case you are wondering why I started this post with a discussion of the Consumer Product Safety Commission, it is because I have been intrigued with the notion of “product safety” relative to intangible products, like banking services and in particular, credit cards.  According to PEW, which made recommendations for a “safe credit card,” one key component is ”an opportunity to opt-out of any proposed change by closing the account and repaying it under the unaltered terms.” 

Since Chase’s change in terms does not include an opt out (despite testimony from its executives before Congress, which highlighted opt outs to illustrate the means by which Chase treated customers “fairly”), then we might also conclude that under PEW’s recommended product safety standards, Chase cards would obviously be deemed “unsafe.” 

As cardholders who have been defamed, injured, and otherwise “burned” by the Chase-branded product, we already know that using Chase products proved to be dangerous.  Therefore, to prevent any further “substantial injury,” I think Chase cards should be subjected to an immediate PRODUCT SAFETY RECALL. 

© Dr Robert Lahm for ChangeinTerms.com, 2009. | Permalink | 12 comments | Add to del.icio.us
Post tags: banks, change in terms, consumer credit, consumers, credit, credit cards, debt, interest, interest rate, notices, regulation, small business, Testimony

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Mr. Semmelman expressed that Chase “appreciates the opportunity to comment on the additional proposed revisions to amend Regulation Z.”  In comparing the comments in the letter with the provisions of Regulation Z, there are certainly some similarities that consumers should find troubling relative to a process that allows those being regulated to influence the rules under which they would operate.  For instance, we now know that it will take 18 months before consumers gain any benefits whatsoever from the newly passed rules under Regulation Z.  Isn’t it convenient that Mr. Semmelman stated: “we urge the Board to allow creditors at least 18 months from the effective date to comply with the Final Reg. Z Rule.”  While he suggested that it would take time to gear up to comply with any new rules, I note that it took hardly any time at all for Chase to launch a massive attack on hundreds of thousands of customers (Chase has been noticeably vague about an exact number) relative to changing the rules with which account holders would have to comply, within 45 days! (raising minimum payments from 2% to 5%, and so forth; see my letter).

By the way, Chase would have preferred that the notice period for new rules with which its customers would have to comply to be only 15 days.  Humm, Chase gets 18 months, but you, the taxpaying consumer who is “bailing out” Chase while at the same time having to endure being bludgeoned by its tyrannical new rules, well, you should only need a “15-day notice.”  Yeah, like I’m really going to find approximately $12,000.00 in 15 days.

© Dr Robert Lahm for ChangeinTerms.com, 2008. | Permalink | 6 comments | Add to del.icio.us
Post tags: chase credit card complaints, chase credit card fee, consumer credit, consumers, credit, regulation

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Here is a link to a shortened summary of the C.A.R.D. Act.

Please consider contacting Senator Dodd and his colleagues to support this Act, as it is probably the only real hope we have for stopping the abuses of credit card companies on the horizon.  One note of caution, regular mail to Washington, DC, can take longer than to other destitions because of security issues, so see the Senator’s site for contact recommendations.  As for me, I sent a letter to him praising his efforts to date, and urging him to continue the fight by Fax.  I also sent a copy of my recent letter to the CEO of Chase Card Services (after I received an outrageous “Change in Terms” notice myself.  These banks really are run by people who are engaged in legalized loansharking.

© Dr Robert Lahm for ChangeinTerms.com, 2008. | Permalink | No comment | Add to del.icio.us
Post tags: change in terms, chase credit card complaints, chase credit card fee, consumer credit, consumers, credit

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