Credit Card Bill of Rights: Why I'm Mildly Skeptical

Well, we can all rest assured that H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009, will indeed pass. I’ve been a huge advocate of strengthening consumer protection in the past, so this is a welcomed change. However, I’m worried that legislators have managed to put restrictions and requirements on credit card companies without taking the last step: making them ineligible to be waived in boiler-plate language. Or, more importantly, the difference between “opt out” and “opt in” … From the text of the bill:

‘(k) Opt-in Required for Over-the-Limit Transactions if Fees Are Imposed-

‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan under which an over-the-limit fee may be imposed by the creditor for any extension of credit in excess of the amount of credit authorized to be extended under such account, no such fee shall be charged, unless the consumer has expressly elected to permit the creditor, with respect to such account, to complete transactions involving the extension of credit under such account in excess of the amount of credit authorized.

‘(2) DISCLOSURE BY CREDITOR- No election by a consumer under paragraph (1) shall take effect unless the consumer, before making such election, received a notice from the creditor of any over-the-limit fee in the form and manner, and at the time, determined by the Board. If the consumer makes the election referred to in paragraph (1), the creditor shall provide notice to the consumer of the right to revoke the election, in the form prescribed by the Board, in any periodic statement that includes notice of the imposition of an over-the-limit fee during the period covered by the statement.

‘(3) FORM OF ELECTION- A consumer may make or revoke the election referred to in paragraph (1) orally, electronically, or in writing, pursuant to regulations prescribed by the Board. The Board shall prescribe regulations to ensure that the same options are available for both making and revoking such election.

‘(4) TIME OF ELECTION- A consumer may make the election referred to in paragraph (1) at any time, and such election shall be effective until the election is revoked in the manner prescribed under paragraph (3).

(Emphasis mine.)

Now, you’ll notice that any election remains in force until one revokes it. Also, you’ll notice that there are periodic disclosure requirements. For educated consumers (for example, readers of The Consumerist or the Wall St. Journal’s personal finance blog “The Wallet”) this should sound familiar. It’s well established that credit cards already contain language describing how they treat information they collect on you–most sell or share this information. As this FDIC page says, though, you can usually opt out. Raise your hand if you’ve ever, in all your time on this round ball of dirt, seen how to opt out or been told of this ability by anyone (other than me, just now). If more than 0.5% of you are raising your hand, there are liars galore reading. Now, opting out on those particular issues is a different animal–there are lots of forms of information sharing you cannot opt out of. In fact, credit bureaus can sell your information too. (Wouldn’t it be nice if this legislation fixed these practices as well?) Despite these differences, the point remains that opt in protections can be abused and aren’t really protections at all. As a matter of fact, it would be nice if we saw protections that were non–waive-able.

Just goes to show that, even when considering laws strengthening consumers’ protection against abusive practices, it pays to read the fine print.

Comments

[youngolf:]

The credit card industry, out of the usual greed, became poorly regulated loan sharks, nothing more.

May 22 08:24 AM

[Larrysyr:]

I don't understand the beef with this provision. If you have to consciously opt-in, then at least you know you run the possibility of incurring these fees.

May 22 12:48 PM

[Northstar10000:]

Fools pure fools. So you think the Government helped you. the Credit Card Companies can now make even more money with this bill. do you really think the government wrote it for you? they wrote it to shut you up, buy your vote and at the same time reward their friends in the Credit Card Industry. There is no way they won't make more money with this fraud of a consumer bull. I can find so many ways around this thing and I don't even work in the CC industry. they are laughing at you fools, wake up///

May 22 08:20 PM

[Alessandro:]

The point of "OPT OUT" is to say 'NO" when the credit card companies change an existing agreement. This is like consumer rights 101.

I have an agreement with a bank, they change terms AFTER the agreement is in place, I SHOULD have the RIGHT to say, "No Thanks", I will OPT OUT. I agree to keep paying down the loan via the agreement already in place and the account will be closed to further activity.

This is such a basic tenet, and apparently it is not in the H.R. 627 bill????

What crap.

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Aug 27 02:58 PM