Wittman update on Credit Cardholders’ Bill of Rights Act
By Guest Post | Saturday, May 23rd, 2009 | PolicyGuest post by Rep. Rob Wittman (R-VA01)
This week in Washington, Congress has taken action to reign in credit card companies from performing unscrupulous business practices. Unfortunately, I’ve heard from many constituents who have received a letter from their credit card company notifying them that their card’s limit has been reduced or their interest rate has been raised without notification.
Even with a history of prompt payments you can still be affected. I myself have been hit by such a practice. I had a credit card which I paid in full and used responsibly. One day I received a letter in the mail informing me that my credit limit had been severely reduced. In fact, the new limit was lower than my current balance, so I had to pay an over the limit penalty. All of this was described in a letter just two sentences long; no further explanation. These sorts of practices have become common place in today’s economy, are deceptive to consumers, and often have ramifications for their credit score.
To combat this trend, the House of Representatives passed H.R. 627, the Credit Cardholders’ Bill of Rights Act this week with bipartisan support and my vote. The bill prohibits a creditor from adjusting any annual percentage rate on preexisting balances, except in certain circumstances, requires increased disclosures to consumers, requires 45 days notice before interest rates are increased, and outlaws providing a credit card to an individual under the age of 21 without a cosigner or a demonstrated ability to afford payments.
I was proud to support this legislation which will stem these all too common practices, which the U.S. Federal Reserve has already declared as “deceptive, unfair and anti-competitive.” Credit cards play an important role for many small businesses and consumers who rely on them to make payments until cash comes into their accounts. If used responsibly, they are a great tool for many to take advantage of. But the current regulations are outdated and many folks have paid the price for these shortcomings.
Congressman Rob Wittman represents the First District of Virginia. He was elected to his first full term in November 2008 and serves on the Natural Resources Committee and the Armed Services Committee where he is the Ranking Member of the Oversight and Investigations Subcommittee.
Tags:
Contribute for Conservatism!
We're 75% there! Thank you to everyone who has so far contributed! Just $2000 to go!
Comments
8 Responses to "Wittman update on Credit Cardholders’ Bill of Rights Act"
I’m sorry, but I do think you mean “rein in” vs. “reign in.” Dratted homonyms…!
Hm. Perhaps I am mistaken, since the DemonRATS and RINOs seem to want to have the government reign over all things, instead of only those outlined in the Constitution…
Its not Congress’ job to manage credit company policies. It’s not a Constitutional duty of the Federal Government.
All government demands on businesses have outcomes. There are winners and losers for every act of government intervening in business.
The likely losers here are people who pay their cards on time will see the overall rates rise.
One thing does concern me about credit card companies. Switching terms on you and altering what their previous representation of the product. Sure, you can argue that the ability to alter certain terms was written in the fine print that barely anyone reads. I would have to agree there.
However, if card companies profit in that manner and then virtually card companies do the same, there would be no way possible to find an accurate representation since all companies would be subject to change and frequently will. Yes, I guess some wise entrepreneur will launch a start up with crystal clear terms and market on not being like the other guys. Then the market would eventually correct itself.
Still, I do believe we are rapidly approaching that fine line between the consumer accepting adjustable terms and misrepresentation/fraud. If it does cross the line it is indeed the duty of the government to step in.
We may reach a point in the future where credit companies will be required to print a disclaimer. Something like:
“You may want to consult an attorney before signing this application for credit”
All that said, I’m not sure I like that bill either.
Kat, I believe that would be a dratted homophone, not homonym. But in this case of overreaching government, it may be the case that “reigning in” is the more appropriate formulation anyway.
BH: If there is fraud, then get your Commonwealth’s Attorney or our AG to bring them to court. It’s not the responsibility of the U.S. Congress. See the U.S. Constitution. I’m glad you don’t like the bill and I’m encouraging you to be more forceful in calling statist politics = statist. It’s another fundamental abuse of federal power.
When Congress intervenes like this, it just screws things up worse.
James, notice I said government. I didn’t really mean Congress. Although I don’t like the bill I do understand what is behind it. Companies sometimes flirt with disaster when they engage in bad paractices that take advanrtage of consumers. That disaster being making more laws to cover what is already there.
There is going to be consumer backlash on credit card companies. Loyal customers are seeing their terms change to mimic other companies that were already switching terms to soak their customers with penalties and interest rates. When the customer becomes disgruntled, they then find it hard to find a company they THINK they can trust not to pull the rug out later. I’d rather pay a higher rate then have to constantly check to see if I’m being screwed by a company I’ve been with for years.
All, this leads to the consumer being irritated and open to legislators taking advantage of emotion over a new issue. Then they pass a law. Then they aim for a reputation of protecting the consumer. It also leads to the excuse of the consumer to say, “It wasn’t MY fault. It was the evil company that put me in debt.” Not only are some consumers guilty of not thinking forward, companies are also.
The next step after playing fast and loose with contracts is gaming the customer. When bonuses and profitablitiy are on the line there is motive to defraud and hope the byzantine evoloution of the credit market becomes so convoluted that they get away with it until the whole thing blows up. Kinda like what has already happend to put a hurt on our economy. Maybe we’ll get yet another bailout! Geesh!
Yea, you don’t want congress passing a new law everyday but, these guys making all this money and being highly educated need to stop digging holes that Congress will be tempted to fill to begin with.
“approaching that fine line between the consumer accepting adjustable terms and misrepresentation/fraud.”
Some people would say we already passed that line. Their response was the walkaway mortgage. Now we have the walkaway car loan and credit card, followed by walkaway malls and restaurants.
These finance companies got their bail out, the taxpayers got the bill. And many seem to think we won’t have to pay that either, until the new credit agreement arrives in the mail.
In one way, shape or form, THE GOVERNMENT created this mess. Whether through over regulation, non-regulation, ignorance, or collusion, Republicans and Democrats together are culpable. Yet the only thing rolling in America is little brown balls emitted from politicians mouths.
If you pay a card in full Mr. Representative, you don’t pay an over limit charge.
Well, said Darrell.
Apparently there are no longer consequences to our actions until all the bail out money is gone. There is no rule of law. The law applies to certain classes of people only. The Rule of Law has become not a structure of freedom, but a tool of political power to be enforced or not. Tim Geithner, failed banks(Bank with BB&T), failed auto industries (BUY FORD) etc., are all examples of what is going horribly wrong.
Government at all levels and by both parties, is responsible for letting this happen. Instead of enforcing the law, they just write more.
Leave your response