Senate Credit Card Hearing: "Take a Long, Hard Look at How You Treat Your Customers."

CNN has the highlights of the Senate Credit Card Hearing and Senator Dodd issued the smackdown WWF (WWE?) style:

“If you currently engage in any business practice that you would be ashamed to discuss before this Committee, I would strongly encourage you to cease and desist that practice. Irrespective of the current legality of such practices, you should take a long, hard look at how you treat your customers.”

Oooh, he’s talking a mean game.

During the hearing some problems with the credit card industry were highlighted by consumer advocates who called for banishment of the following:

•Universal default pricing: With this policy even if you have a sterling payment record on your card account, your issuer may jack up your rate if you’re late on bills on other accounts or if your credit score falls. The number of issuers with this policy has gone down recently.

•Double-cycle billing: If you charge $1,000 one month, and pay off $900, a bank may charge you interest on the full $1,000 in the next month and beyond until the remaining $100 is paid off. Carter Franke, executive vice president of marketing at JP Morgan Chase, said that due to customer confusion, the bank decided very recently to end its practice of double-cycle billing. She did say, however she didn’t feel it was an unfair practice, likening it to a bank loan, where you start paying interest immediately on the full amount, not just a portion of the principal.

• Zero-tolerance late payment policies: Tamara Draut, director of economic opportunity programs at Demos, noted that customers who may be a day late or even an hour late in their payment are often hit with the same $35 late fee as customers who might be three months’ late. Being subject to a couple of late fees may also result in a penalty rate imposed on your account, which can top 30 percent. And that punitive rate may then be applied not only to future purchases but to an existing balance as well, effectively boosting the cost of the cardholders’ past purchases.


Why you should pay an annual credit-card fee [CNN]


Edit Your Comment

  1. timmus says:

    I’d be curious to know what’s coming out of these proceedings beyond a dog & pony show. You know, I know, the Senate knows, we all know that the industry is doing some pretty bad stuff. I’m sure the industry executives have all their ducks in a row. Is this just smoke & mirrors and a publicized attempt to give the industry a slap on the wrist? If you look at Congressional campaign contributions, a huge amount of it comes from the banking industry. What exactly is really going to chnage?

  2. elvisaintdead says:

    he’s also ‘considering’ a run at the white house. he’s been around a lonnnng time. where was this attitude back then?

  3. FriarJohn says:

    Link is broken. Extra http:// on the front.

  4. facted says:

    I think the key descriptor in that article is “he’s TALKING a mean game”. Action speaks louder than words, especially on capital hill.

  5. mathew says:

    Translation: “You know how MBNA was Bush’s top donor, and they got tightened bankruptcy laws in return? Well, that was just the start. The rest of us want a piece of that tasty pie.”

  6. AcilletaM says:

    It’s WWE. They lost the lawsuit to the World Wildlife Fund.

  7. zl9600 says:

    Once in a while, when you wonder what we’re gonna get from this new congress, you hear good stuff like this.

    Whether it turns into anything positive or forces banks to change their habits is another thing, as there are windbags on both sides of the aisle.

    But at least there’s a new posse in town. I’d like to think lobbyists like MBNA have lost the direct line to crappy legislation like the bankruptcy laws they hammered through (I like to call it the Credit Card Company Recovery Act, just so it sounds more like the industry giveaway that it was).

    Then again for every new posse, there’s a new team of lobbyists. And it is worth mentioning that while MBNA may have been a huge supporter of Bush, the president is not the one who comes up with legislation. It’s congress.

  8. Mr. Gunn says:

    Nobody was disturbed at the suggestion that people who pay their balances every month should have to pay a fee?

  9. isadora says:

    Ohhh, I hope (though doubt) this will actually go somewhere!

    Several years ago I found myself in a tight spot and after college. I’d come out of college with debt (paid for everything myself and didn’t have the best money management skills at 19). Who knew my post-college editorial career would not be a top paying field? Heh.

    Anyway, I got laid off from this horrible company and called my creditors to work it out. Student loans were frozen but Discover Card was a real bastard! They would allow interest-only payments for 90 days but would jack the interest and report me as a credit risk, causing a universal default issue with my other credit card.

    Sure enough, I ended up having to write letters to close all of my accounts so I could keep my good interest rates (a little known loophole, depending on your state). Of course, that led to nobody giving me credit and a big black mark for the whole time period. They simply WILL NOT work with people in a tight spot. They’re like the mafia!

  10. marcia says:

    This is what the credit card industry did to my business. Thye destroyed my business.

    We are the owners of A&B Enterprises dba Fantasyline. We had been in business for 23 years. Our business was adult talk lines. We have always used live operators to screen our callers and verify bank information. We had excellent fraud control and verification procedures. Our primary form of payment was VISA and MasterCard. We had various merchant accounts. Initially we had merchant accounts with banks. At some point these banks discontinued telephone order processing and or credit card processing so we switched to third party processors etc. Our merchant accounts never had a bad mark against them. They were never cancelled due to chargebacks.

    Our last processor was Online Data in Westchester IL. In December 2004 they informed us that they had to switch our account. In April 2005 they stated they could not switch our account because we sold downloadable DVD’s. This was false. We enclosed a letter to that effect to Online Data. The letter did no good and Online Data informed us that due to the nature of our business they could no longer process our charges.

    Online Data recommended we contact Nelix to find a merchant account. Nelix refereed us to ECS World UK. This arrangement did not work out as ECS World UK failed to pay us monies owed.

    Due to the loss of our merchant account we had to close our business. Online Data claimed that they were being forced to close all Adult Oriented Web Businesses by Visa and Mastercard International and Chase JP Morgan Bank. Fantasyline never was a Web Business. Closing our business abruptly caused us severe hardship.

    Aside from depriving us of our livelihood and the complications that caused, we always paid high merchant fees.
    Marcia Siegel