Hearing the credit card abuse stories

Wednesday, March 12, 2008

UPDATE: In a stunning turn-around, the consumer witnesses in this story were not allowed to testify because they would not agree to a broad waiver which would allow the credit card companies to make public anything they wanted to tell about the witnesses' financial records, credit histories, purchases, etc. Read the story from the perspective of Harvard Professor Elizabeth Warren.

Above: The consumer witnesses participate in a press conference outside Congress after being prohibited from telling their stories.

Three people out of thousands who have contacted Consumer Action for help with credit card problems will be witnesses at the U.S. House of Representatives Subcommittee on Financial Institutions and Consumer Credit hearing on March 13 titled “The Credit Cardholders’ Bill of Rights: Providing New Protections for Consumers.” Of the five featured consumer witnesses, who will tell stories of how they were abused by credit card companies, three had sought assistance from Consumer Action's complaint hotline.

Watch the hearing live on streaming video on your computer. It begins at 10 a.m. Eastern Time on Thursday, March 13. Click here to watch.

Linda Sherry of Consumer Action said: “Let us know if you have a consumer problem. We really want to hear your credit card horror stories.” When you make a complaint to Consumer Action, we ask your permission to share it with the media, lawmakers and consumer attorneys. Click here to make a complaint or tell us your story.

Sherry, a former reporter with weekly newspapers, said, “There is a old saying that a picture is worth a thousand words. In spotlighting some of the ways consumers are subjected to unfair and deceptive practices, the saying should be, “A victim is worth a thousand words.”

Your story can have a big impact if it is featured by the news media, or if you are invited to be a Congressional witness. You can help hundreds of thousands of consumers avoid the same fate by sharing your story. “Your story will also get the attention of people in power who have the ability to write laws or bring court cases that protect all consumers,” said Sherry.

Here are the stories of the three witnesses who originally contacted Consumer Action to complain:

• Steven Autrey of Fredericksburg, VA, contacted Consumer Action in August 2007 to tell how his wife was four hours late paying her Capital One card online because she had a medical emergency. She was charged $39 for being late even though she paid online on the due date, but missed the "cutoff" time by four hours. The $39 late fee pushed her card over-limit, and the next day an additional $39 overlimit fee was levied. When she called Capital One and explained the situation, the company removed only the overlimit fee as a one-time courtesy. But her interest rate was raised from 14.9% to more than 27%.

  Autrey also made Consumer Action aware of Capital One's actions on his own Capital One Visa. After 7 years of having a "fixed" 9.9% card, Capital One advised Autrey that his card would change from 9.9% to 15.9% due to what the company called changes in the business and interest rate markets. To avoid the increase, Autrey had to close the 7-year-old account, which he said lowered his FICO score.

  Following the advice of Consumer Action’s hotline manager, Joe Ridout, Autrey sent a letter to the president/CEO of Capital One and cc:ed a hard copy to both of his US Senators, the local newspaper and to Sen. Carl Levin as chair of the Senate Select Committee on Investigations, who has been a staunch foe of credit card practices that are unfair and deceptive to consumers.

• Susan Wones of Denver, CO, contacted Consumer Action in December 2006, complaining that the interest rate on her Chase card had been raised sharply for no reason. “I am at a loss on why my interest rate was raised,” Wones told Consumer Action. “I have never been late and pay at least the minimum payment. Last year Chase sent me a notice stating they were going to raise my interest rate to 24.99% or I could opt out and close my account. I closed my account. I got another statement and without any warning they had raised my rate to 24.99%. When I called them they said they pulled a credit report and because my balances were high on my cards, they raised my rate. I said the account had been closed because I didn’t accept these terms but they gave the new credit report as a reason not to honor my decision to close the account.”

  Ridout told Wones that there was pending legislation that would curb some of these abusive practices—a good bill authored by her own representative, Mark Udall of Colorado. Wones contacted Udall’s office and as a result was tagged as a witness in the March 13 hearing.

• Christy Mylar-Smith of Niagra Falls, NY, contacted Consumer Action in January of this year about her Citi card. “My husband has been a good customer of over 9 years, and never paid late until one time at the end of 2007. Now they have raised his rate from 12.99% to 32.50% and will not reduce the rate. We now cannot afford to pay this card along with all the other bills. It just seem so unfair—they are forcing us to have bad credit.”

  Mylar-Smith was advised to send a complaint to the Office of the Comptroller of the currency, the federal regulator of Citi, a national bank.

Hearing on the Credit Cardholders’ Bill of Rights

Rep. Carolyn B. Maloney of New York, Chair of the Financial Services Subcommittee on Financial Institutions and Consumer Credit, is the author of “The Credit Cardholders’ Bill of Rights. Maloney, a consumer champion for ending abusive credit card industry practices has organized the March 13 hearing featuring consumers, legal and economic experts and credit card industry representatives.

Chairwoman Maloney said, “In recent years, the playing field between card companies and cardholders has become very one-sided. A credit card agreement is supposed to be a contract, but what good is a contract when only one party has any power to make decisions? We need to level the playing field, and the balanced reforms in this legislation will help do just that.”