California Credit Law Blog

Credit card companies are endorsing the Federal Reserve Board's proposal to mandate better disclosure of credit card terms to consumers, apparently hoping that more disclosure will head off Congressional attempts to outlaw some of the practices consumers complain about the most.

Kathleen Day of the Washington Post has been following the dynamic between some lawmakers' attempts to prohibit some of the worst industry practices and the Federal Reserve's proposal to disclose those practices but keep them legal. As Kathleen Day's article (discussed above in Mark Anderson's May 27 post) points out, some of the worst industry practices include "universal default," in which a consumer's interest rate on all his credit cards is raised if one of his payment is late; and "risk-based pricing," in which companies reserve the right to raise a consumer's credit card interest rate at any time, for any reason.

The proposed new rules would require a 45-day notice before credit card terms could be changed, instead of the current 15 days. They would also require companies to apply consumers' payments to the debt carrying the highest interest rate, not the lowest, as many companies do now.

Consumer advocates complain that the Federal Reserve's proposed rule changes don't eliminate some of the common abusive practices that only Congress can stop; they only provide better disclosure about what those practices are.

Posted by Carol McLean Brewer | Permalink | Email This Post

Posted In: Credit Cards

Bookmark:

Credit bureaus are required to correct errors in consumers' credit reports when the consumers dispute inaccurate items in their credit reports. The errors usually stem from inaccurate reports provided by credit card companies, debt collectors and retailers. Often, the credit bureaus' investigation of the disputed item is merely to ask the "supplier" of the inaccurate information if the information is accurate. Too often, the supplier tells the credit bureaus the information is accurate which leads to the credit bureaus refusing to correct the reports.

The Fair Credit Reporting Act (FCRA) gives the consumer the right to sue the credit bureaus and suppliers of the erroneous information for damages, injunctive relief and attorney's fees.

The FCRA is a complicated statute. The credit bureaus are skilled at defending their positions. Consumers should turn to attorneys knowledgeable in this area of the law. KABOB attorneys are available for consultation with consumers in California. For more information go www.kaboblaw.com.

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Correcting Errors on Your Credit Reports

Bookmark:

The Sunday May 27, 2007, edition of the Washington Post contains an article entitled "A Highly Charged Relationship" about Americans' love hate relationship with credit cards. What what we all love is the convenience, but we hate are the practices hidden in the fine print such as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender's favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake.

The article states that most complaints involve "over limit" fees and penalties; interest charges on the whole debt even when part of it has been paid; billing errors (in the case discussed, Capitol One harassed a dad mourning the death of a son who had left a debt of $217 - - Capitol One erroneously insisted that the debt was more than 6 times greater); refusal to work with credit counselors who are trying to help the card holder; "workout plans" that don't reduce the consumer's debt; and "due dates" on days when it is literally or effectively impossible to make payment (here, the consumer paid in person at the bank on Saturday, in advance of the Sunday due date - - a date on which it was impossible to pay - - but since Saturday payments are not credited until the next business day, the consumer got hit with a late charge).

For the complete article, go the Washington Post website and search for the article by Kathleen Day.

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Credit Card Scams , Credit Cards

Bookmark:

On May 3, 2007, the 7th Circuit Court of Appeals held that credit bureaus such as Equifax, Experian & Trans Union must provide consumers credit disclosures that are not only accurate, but "clear." In Gillespie v Equifax, the plaintiffs requested their credit reports, which, among other things, listed the "date of last activity" on certain collection accounts. Depending on what event triggered the listing in this category, the report could lack clarity as to when delinquency had occurred. Having clarity on this point could be important to the consumer because, under FCRA, a consumer report may not include “accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.” 15 U.S.C. § 1681c(a)(4). Here's what the Seventh Circuit held:

We conclude that the consumer reporting agency must do more than simply make an accurate disclosure of the information in the consumer’s credit file. The disclosure must be made in a manner sufficient to allow the consumer to compare the disclosed information from the credit file against the consumer’s personal information in order to allow the consumer to determine the accuracy of the information set forth in her credit file. In writing § 1681g(a)(1), Congress requires disclosure that is both “clearly and accurately” made. An accurate disclosure of unclear information defeats the consumer’s ability to review the credit file, eliminating a consumer protection procedure established by Congress under the FCRA.

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Consumer Credit 101 , Correcting Errors on Your Credit Reports

Bookmark: