May 20, 2010
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News: China Clamps Down On Deadbeats
According to the People's Bank of China, higher numbers of Chinese credit card customers are defaulting. During the first quarter 2010, defaults rose by 14.4 percent from the previous quarter. China has not been alone in the credit card default battle as other nations including the United State have undergone severe economic and unemployment difficulties. Most countries have taken a closer look at its laws that regulate the financial industry to make sweeping changes in how both consumers and banks conduct business. China has been no exception as witnessed by the recent actions its lawmakers took to help curb consumers from racking up thousands of dollars and then walking away from credit card debt.
New laws issued by China lawmakers will make it more difficult for credit card consumers to walk away from repaying their debt. Lenders will soon have the authority to file criminal charges against any cardholder with more than $1465 in credit card debt who defaults. According to the new law, a cardholder can be prosecuted if he borrows with the intent to get the money illegally and then defaults within three months after already receiving two notifications from the lender. However, if the debt is less than $1,465, and the cardholder repays the debt with interest, the cardholder is exempt from criminal charges.
Controversy as to whether or not the new law will be effective in curbing credit card defaults has some individuals believing that enforcement will be difficult. Many of the individuals who intend to defraud the banks, complete false applications making it difficult to track down thieves. These thieves apply for and credit using false or stolen identities. Like the U.S., identity theft has become one of the fastest growing criminal activities in China. As a result, China has a nationwide initiative to step up action to derail such illegal activities.