Protection Against Credit Card Companies

A Federal Statute was passed by the United States Congress and signed into law on May 22, 2009 by President Barack Obama giving the American consumers some protection against the abusive practice by credit card companies. The act is the Credit Card Accountability and Disclosure Act of 2009. (Link to attached copy of act as PDF document)

The Act is Summarized below:

Sec. 1. Short Title
Sec. 2. Regulatory Authority

Title I – CONSUMER PROTECTION
Sec. 101. Public notice of rate increases required. Prohibits increases in APR without 45 days notice. It also prohibits rate interest rate increases retroactively to existing balances. Further, it requires a clear notice of the right to cancel the credit card when the APR is raised.

Sec. 102. Freeze on fees on canceled cards and on interest rate terms. If cardholder cancels a card the credit card company cannot raise APR or cancel the repayment terms.

Sec. 103. Sets limits on interest charges and fees.

Prohibits double cycle billing: Prohibits credit card issuers from imposing interest charges on any portion of a balance that is paid by the due date.

Over limit fee restrictions: Cardholders must be given the option of having a fixed credit limit that cannot be exceeded, and credit card companies cannot charge over limit fees on cardholders with fixed limits. Cardholders may elect to prohibit creditors from completing over limit transactions that will result in a fee or constitute a default under the credit agreement. Over limit fees can only be charged when an extension of credit, rather than a fee or interest charge, causes the credit limit to be exceeded. Over limit fees can only be applied once during a billing cycle.

Prohibits charging interest on fees: Interest being charged on late fees and over limit fees is prohibited.

Limits on charging certain fees: Prohibits credit card issuers from charging a fee to allow a credit cardholder to pay a credit card debt, whether payment is by mail telephone, electronic transfer, or otherwise. Requires fees to be reasonably related to costs. Foreign currency exchange fees y only be imposed in an account transaction if the fee reasonably reflects costs incurred by the creditor and the creditor publicly discloses it method for calculating the fee.

Sec. 104. Consumer right to reject credit card before notice is provided to open an account:
Cardholders who get pre-approved has the right to reject the card up until they activate it without having their credit adversely affected.

Sec. 105. Use of terms clarified: Prevents credit card companies from using the terms “fixed rate” and “prime rate” in a misleading way by establishing a single definition.

Sec. 106. Application of card payments: Credit card companies are prohibited from setting early deadlines for credit card payments. Payments must first be applied to the credit card balance with the highest rate of interest, and to minimize finance charges. Prohibits late fees if the credit card company delayed crediting the payment. Issuers can no longer charge late fees when a cardholder presents proof of mailing payment within 7 days of the due date.

Sec. 107. Billing cycle length: Credit card statements must be mailed 21 days before the bill is due.

Sec. 108. No more universal default and unilateral changes to credit card holder agreements:
Credit card issuers can no longer increase interest rates on card holders in good standing for reasons unrelated to the card holder’s behavior with respect to that card. Prevents credit card issuers from changing the terms of a credit card contact for the length of the card agreement. Allows penalty rate increases only for specific, material actions or omissions of the consumer specified in the card agreement. Requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations.

Sec. 109. Enhanced penalties: Increasing existing penalties for companies that violate the Truth in Lending Act for credit card customers. (Link act to attached PDF document)

Sec. 110. Enhanced oversight: Requires credit card issuers’ primary regulator to evaluate the credit card policies and procedures of credit card issuers to ensure compliance with credit card requirements and prohibitions. Improves existing data collection efforts related to credit card interest rates, fees, and profits.

Title II – ENHANCED CONSUMER DISCLOSURES

Sec. 201. Payoff timing disclosures: Credit card issuers must provide to the individual consumer account information and to disclose the period of time it will take the cardholder to pay off the card balance if only minimum monthly payments are made. It also requires issuers to disclose the total amount of interest the cardholder will pay in order to pay off the card balance if only minimum monthly payments are made.

Sec. 202. Late payment and deadlines penalty requirements: Requires complete disclosure in billing statements of required payment due dates and applicable late payment penalties. It also requires that cardholders be given a reasonable period of time to make payments. Requires that payment at local branches be credited same-day.

Sec 203. Renewal disclosures: Requires credit card issuers to provide account disclosures to consumers upon card renewal when the terms of the card have changed.

Title III – PROTECTION OF YOUNG CONSUMERS
Sec. 301. Extensions of credit to underage consumers: When soliciting persons under the age of 21 the credit card issuers must obtain an application that contains either; (1) the signature of a parent, guardian, or other qualified individual willing to take financial responsibility for the debt; (2) information indicating an independent means of repaying any credit extended; or (3) proof that the applicant has completed a certified financial literacy or financial education course.
Sec. 302. Restrictions on certain affinity cards: Mandates that credit card issuers, as a condition for entering into commission-based affinity cards with higher education institutions, require that all affinity card customers under the age of 21 comply with the listed requirements above.

Sec. 303. Protection of young consumers from pre-screened offers of credit: This section prohibits consumer reporting agencies from furnishing reports in connection with firm offers of credit or insurance that is not initiated by a consumer under the age of 21. It allows consumers who are at least 18, but not yet 21, to elect, in writing, to have their names and addresses included in any list of names provided by such agencies in connection with such transactions.

Title IV – FEDERAL AGENCY COORDINATION

Sec. 401. Inclusion of all Federal banking agencies: The Federal Commission Act is amended to transfer to each federal banking agency, with respect to depository institutions it supervises, the authority to prescribe regulations governing unfair or deceptive practices by banks and saving and loan institutions. It requires the federal banking agencies to prescribe such regulations: (1) jointly to the extent practicable; and (2) in consultation with the Federal Trade Commission (FTC). It instructs the Comptroller General to report to Congress on the status of regulations of the federal banking agencies and the NCUA regarding unfair and deceptive acts or practices by depository institutions.

Title V – MISCELLANEOUS PROVISIONS
Sec. 501. Study and report on interchange fees: Comptroller General of the GAO is required to conduct a study on inter change fees and their effects on merchants and consumers, and to report findings to Congress in 180 days.

Sec. 502. Study and report on credit card rating system: The Comptroller General of the GAO is required to establish a Credit Card Safety Rating Commission that will determine whether a rating system to allow cardholders to quickly assess the level of safety of credit card agreements would be beneficial to consumers, and to make recommendation to Congress
concerning how such a system should be devised.

For more information call Associated Attorneys at (866) 411-4693 or contact associatedattorneys.com.

About the Author: Melvin R. Singleterry, licensed practicing attorney, former Judge and former
elected District Attorney, specializing in consumer debt settlement and consumer debt relief

Although Advanta in November of 2009 filed for protection and reorganization under Chapter 11 of the U.S. Bankruptcy code, the “games” still go on. They are not issuing any more credit cards or extending any type of credit, they are, however, attempting to collect outstanding accounts.

As an attorney involved in credit card negotiation and credit card settlement I know by recent experience that their credit card account collection entity does some of the same things that help cause Advanta to lose account holders in great number which purportedly help lead to their demise.

In calling the Advanta phone number listed on credit card statements you will be greeted by “Card Services”. Like Advanta in times past from this group it is difficult, if not impossible, for a customer can get adjustments for unjust late or over limit fees or a reduction in interest rates. A recent example. A few months ago a client called the Advanta number and talked to a representative from “Card Services”. The client paid the monthly minimum amount due on the account by use of a debit card (at an additional fee, of course). The client paid $152.50 which was the minimum amount due. Upon receipt of his next monthly bill there was a $39.00 charge as a late fee. It showed that .50 was still owed from the last month payment. Consequently, the payment was late. Whether by mistake or design the representative for “Card Services” entered the payment as $152.00 rather than $152.50.

One would think that getting an error made by the representative corrected and getting the late charge of $39.00 removed would be a relatively easy manner. Wrong! I started calling on behalf of my client and kept being told that there was nothing they could do about it and that the late fee would have to be paid. I kept insisting on speaking with a “supervisor”. There were a couple of times in the process of being transferred to the supervisor that the phone call was disconnected. After several calls over a period of days I was finally able to talk to a supervisor and once again I explained what had happened. He said that there was nothing he could do about it and the $39.00 late fee would have to be paid. I ask him to listen to the recording they made at the time the payment was made and he would see that the error was clearly made by the representative. He refused to do so. I then told him that I would file a complaint with the Federal Trade Commission and if needed be I would file suit on behalf of my client if they did not correct their mistake. He relented and deleted the $39.00 late charge. Throughout the discussions with him he was arrogant and pompous.

Recently, I have had clients who paid their credit card monthly by mail by sending them at least 2 weeks prior to the due date. We have been tracking these payments and find that it takes about 3 weeks for the client’s check to clear their bank account. Just last month client paid his monthly amount due by sending the payment in the mail to Advanta about 2 weeks prior to the due date. In this instance the due date was a Sunday. The next monthly statement showed there was an assessment of $39.00 late fee as the check was posted to the account on Monday following the Sunday due date. Once again “Card Services” refused to reverse the late fee. When I raised the issue regarding the payment being due on Sunday I was told that since it was a corporate account they could legally make Sunday a due date. When I raised the issue that payment had been made in plenty of time for Advanta to receive and post it prior to the due date I was told that in order to not have any problems in this regard the payment should be made over the phone by debit card. Of course, there is an additional fee for this service. After several phone calls, being placed on hold, being disconnected and transferred to different parties I was finally able to get the matter resolved.

For more information call Associated Attorneys at (866) 411-4693 or contact associatedattorneys.com.

About the Author: Melvin R. Singleterry, licensed practicing attorney, former Judge and former
elected District Attorney, specializing in consumer debt settlement and consumer debt relief.