In May 2009, Congress introduced the Credit Card Accountability and Responsibility and Disclosure Ac

For decades, American consumers have relied on the availability and accessibility of credit and debit cards to purchase consumer products and services on the assumption that they were fully and fairly aware of the consequences of their purchases. Most consumers were under the mistaken belief that credit card companies accurately midtown madness 2 downloads depicted and truthfully represented credit terms, interest rates, fees, and costs. However, 800 billion dollars of credit card debt later, Americans are realizing that credit card companies have sneakily and deceptively midtown madness 2 downloads turned consumers naivety into a cash cow of profit. Accompanying the companies misleading tactics was an industry void of regulation, allowing these companies to wage a large assault on consumers gullibility without the fear of being punished or prosecuted.
In May 2009, Congress introduced the Credit Card Accountability and Responsibility and Disclosure Act of 2009 (the Credit CARD Act ) to regulate the timing and manner of collecting credit card fees as an initial solution. midtown madness 2 downloads However, midtown madness 2 downloads this original solution was attacked by credit industry leaders, as well as criticized by consumer rights advocates for still allowing credit card companies and banks to engage in deceptive and misleading midtown madness 2 downloads tactics. This article highlights a number of traditional deceptive tactics that credit card companies routinely employed before the passage of the Credit CARD Act of 2009, as well as reveals the impact of the Credit CARD Act on the credit debt crisis. Finally, this article offers proposed solutions to reduce the risk of unfair and misleading tactics by credit midtown madness 2 downloads card companies.
1 Deceptive Tactics of Credit Card Companies By: Aaron J. Byrd Table of Contents I. Introduction …............................................................................................................................1 II. The Problem: Deceptive Tactics of Credit Card Companies ...…………………………....2 III. The Initial Solution: The Credit CARD Act of 2009 ….......................................................3 IV. Drawbacks to the Credit CARD Act of 2009 ……………………………………………....5 V. The Proposed Solution: Amend the Credit CARD Act of 2009 …………………...............6 VI. Conclusion ……………………………………………………………………………………8 I. Introduction midtown madness 2 downloads For decades, American consumers have relied on the availability and accessibility of credit and debit cards to purchase consumer products and services on the assumption that they were fully and fairly aware of the consequences of their purchases. Most consumers were under the mistaken belief that credit card companies accurately depicted and truthfully represented credit terms, interest rates, fees, and costs. However, 800 billion dollars of credit card debt later, Americans midtown madness 2 downloads are realizing that credit card companies have sneakily and deceptively turned consumers' naivety into a "cash cow" of profit.i Accompanying the companies' misleading tactics was an industry void of regulation, allowing these companies to wage a large assault on consumers' gullibility without the fear of being punished or prosecuted.ii In May 2009, Congress introduced the Credit Card Accountability and Responsibility and Disclosure Act of 2009 (the "Credit CARD Act") to regulate the timing and manner of collecting credit card fees as an initial solution.iii midtown madness 2 downloads However, this original solution was attacked by credit industry leaders, as well as criticized by consumer rights advocates for still allowing credit card companies and banks to engage in deceptive and misleading tactics.iv This article highlights a number of traditional deceptive tactics midtown madness 2 downloads that credit card companies routinely employed before the passage of the Credit CARD Act of 2 2009, as well as reveals the impact of the Credit CARD Act on the credit debt crisis. Finally, this article offers proposed solutions to reduce the risk of unfair and misleading tactics by credit card companies. II. The Problem: Deceptive Tactics of Credit Card Companies midtown madness 2 downloads Credit card companies have traditionally employed a variety of deceptive or misleading tactics against consumers to maximize their profit and revenue from cardholders. These companies would routinely charge costs and fees for opening a credit card account directly to the credit card, thereby deceptively reflecting the amount of credit actually available to the consumer.v Credit card companies would also immediately raise interest rates on credit cards once a monthly payment became overdue – even if payments were made one day late.vi Many credit card lenders would engage in a tactic known as "slamming" or "loan packing," in which the lenders would sign consumers up for "protective measures," such as credit insurance, without ever disclosing this fact to the consumers or without midtown madness 2 downloads the consumers midtown madness 2 downloads ever agreeing to it.vii Banks historically midtown madness 2 downloads have used a tactic called "universal default," in which credit card agreements included a provision that the bank could raise interest rates on a consumer's credit card even if the consumer was late on other payments due, such as utility bills, cable bills, or car payments.viii A common tactic that credit card companies employed is to receive a consumer's payment and apply it to the loan with the lowest interest rate, so that the company can keep charging the higher interest midtown madness 2 downloads rate from the other loans.ix Lenders also allowed purchases midtown madness 2 downloads over the credit limit, and then raised interest rates and placed the negative information on the consumer's credit report, even if the purchase had only gone over the credit limit by one dollar.x Banks also routinely changed due dates so people would pay late, and the banks simply hid the disclosure of the new due date somewhere in the plethora of pages of the credit cardholders' agreements.xi Credit card companies and banks developed a new tactic midtown madness 2 downloads in which consumers were charged fees for having a $0.00 balance or for "inactivity."xii Consumers are actually charged fees for paying midtown madness 2 downloads off the entire balance of their credit card and for not making any purchases on the credit card for a certain 3 period of time. Furthermore, credit card lenders would solicit consumers with attractive low introductory interest rates and Annual Percentage Rates that eventually ballooned to very high rates early in the term.xiii Exhaustive research reveals courts have consistently held that credit card companies can unilaterally change or modify the terms of the credit card agreements, as long as companies provide some form of notice to the consumers.xiv Most noticeably, credit card companies targeted low-income consumers and collected fees based upon a "minimum payment calculation", in which companies would disclose a "minimum payment" due, but did not disclose related penalty fees. This forced low-income consumers continually into default midtown madness 2 downloads and unable to remain current midtown madness 2 downloads on their credit card payments.xv Using a number of these tactics, credit card companies and banks would further target consumers who were clearly unable to make payments, and therefore collect fees and raise interest rates on these "subprime" consumers.xvi Considering the long history of deceptive tactics employed by credit card companies, consumers demanded that Congress midtown madness 2 downloads improve the regulation of credit card tactics and restrictions on credit card disclosures. III. The Initial Solution: The Credit CARD Act of 2009 In May 2009, Congress enacted midtown madness 2 downloads the Credit CARD Act of 2009 to regulate the timing and manner of collecting credit card fees. xvii The Credit CARD Act amended midtown madness 2 downloads the Truth in Lending Act (TILA).xviii TILA's primary purpose was to ensure meaningful disclosure of credit terms so consumers could compare available credit terms, midtown madness 2 downloads avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit midtown madness 2 downloads card practices. xix Under the Credit CARD Act, credit card companies are required to comply with new restrictions and regulations, and are prohibited midtown madness 2 downloads from engaging in the deceptive tactics mentioned above. Specifically, the Credit CARD Act prohibits retroactive rate increases and declares that a "universal default" provision is now illegal.xx The Credit CARD Act also requires credit card companies to no longer increase interest rates on existing balances, except when an account is 60 days past due or if 4 it already carries a variable interest rate and the accompanying index rate changes.xxi Credit card companies midtown madness 2 downloads may no longer allocate a consumer's payment above the minimum payment in a manner that maximizes interest rates.xxii Additionally, midtown madness 2 downloads the Credit CARD Act must give 21 days between the date a bill is mailed and the payment due date.xxiii Credit card companies and banks must abide by the limits within the Act on how large a penalty fee can be, and credit card companies are prohibited from charging fees that are more than 25 percent of a subprime credit card's line of credit.xxiv Finally, the Credit CARD Act contains other prohibitions and restrictions against credit card solicitations and marketing credit cards to college students.xxv midtown madness 2 downloads Early research revealed that the Act has reversed much of the unclear pricing on credit cards that for years misled consumers into believing they paid less for credit card debt than was actually true.xxvi midtown madness 2 downloads The CARD Act also revealed that interest rates paid on credit cards have fallen in the last year.xxvii In fact, the Credit CARD Act shows that not only did interest rates decline between 2009 and 2010, but also that the credit card fee income was flat.xxviii Opponents offer the strong argument that implementation of the Credit CARD Act will lead to higher rates imposed by banks and more difficulty for consumers to obtain credit. However, a counterargument shows that this is because people mistakenly view higher rates on mail solicitations and other offers midtown madness 2 downloads as a price increase. In reality, though, the credit card offers now just more closely match actual costs. Prices remain relatively level, but consumers now have a better understanding of the price differenc