December 10, 2009
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No Letting Up by Credit Card Companies, Pt.1
New tricks to dodge new legislation.A new study conducted by the Center for Responsible Lending (CRL) finds that the credit card industry is up to some new tricks to dodge new legislation. According to the report, the financial industry plans on hitting the 80 million plus families with “arbitrary, unfair interest rate hikes, and fees.” The study, "Dodging Reform: As Some Credit Card Abuses Are Outlawed, New Ones Proliferate," looked at the current industry activities and found that card companies continue to grow despite the new credit card reform legislation and the federal government's steps to stop them. The study showed eight different practices that fall under this category. According to the report, these deceptive practices have made it very difficult for Americans to determine the true cost of their card debt. These practices demonstrate the financial industry's ability to find loopholes in the new credit card reform rules.
Congress is currently reviewing a new Wall Street reform bill that will establish the Consumer Financial Protection Agency (CFPA) that will be responsible for monitoring the actions of credit card companies and impose stiff penalties to violators. Deceptive late payment fees, manipulation of interest rates, and other miscellaneous fees are a few of the eight practices mentioned in the study. According to Josh Frank, Author of the Center's report, the Credit CARD Act is of great benefit for American families; however, research indicates that the “industry keeps finding clever ways to get around meaningful reform.” The country needs the proposed Wall Street Reform Act to regulate the industry and even the playing field for consumers. Despite the new credit card reform bill's restrictions on these activities, lenders continue to ignore the law and are blatantly ignoring the intentions of the law.
The Center's report also highlights several other deceptive practices of credit card companies including the implementation of minimum finance charges; hidden international transaction fees; inactive account fees; fees over and above interest fees on account balances and cash advances; minimum finance charges; and variable interest rates that have excessive high floors.