Federal Reserve Proposes New Rules For Credit Card Issuers
This past Friday, May 2, 2008, the Federal Reserve Board proposed rules designed to limit unfair practices regarding credit cards and overdraft services. Among other provisions, the rules would protect consumers from unexpected increases in the rate charged on pre-existing credit card balances.
The rules also would prohibit so-called “two-cycle” billing, would require that consumers receive a reasonable amount of time to make their credit card payments, and would prohibit the use of payment allocation methods that unfairly maximize interest charges. They also include protections for consumers that use overdraft services offered by their bank.
The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD).
It’s all part of the Federal Reserve Board’s attempt to increase protections for consumers who use credit cards. According to the press release issued in connection with the proposal, five key provisions are included:
The proposal also addresses acts or practices in connection with a bank’s payment of overdrafts on a deposit account, whether the overdraft is created by check, a withdrawal at an automated teller machine, a debit card purchase, or other transactions. The proposal requires institutions to provide consumers with notice and an opportunity to opt out of the payment of overdrafts, before any overdraft fees or charges may be imposed on consumers’ accounts.
You can see the Federal Register notices here.
Your Next Debt Collection Call May Come From India
Just when you thought a debt collector was calling from America, it turns out, that call is more likely than not from India. That is right, you may be getting a telephone call asking you to pay a delinquent bill straight from Gurgaon, India. These bill collectors sit in cubicle farms thousands of miles away, calling more than 100 customers a day.
A recent story in the New York Times highlights this growing, and disturbing, trend.
Encore, based in San Diego, is one of a growing number of collection agencies training and employing foreign nationals in India and elsewhere around the world for pennies on the dollar. Many Indians, at most, bring home $63.00 a month.
When outsourced employees from Indian are being trained, they take on an American name in case the consumer asks their name. Having an American name does not make them American, especially if they do not know the American lingo or their English is lacking. Consumers can routinely tell when a call is coming from abroad, and are clearly not as stupid as the debt collectors think.
This all begs the question of whether it is possible to take a foreign national and force them to adhere to the Fair Debt Collection Practices Act. Will these mild-manner folks, unschooled in the nuances of American syntax, be savvy enough to resist the urge to cross the line between legality and illegality?
More to the point, in the case of litigation against a debt collector for violations of the federal consumer protection laws, will the defending companies produce their employees for depositions? In such third-world countries it is often impossible to locate former employees due to lax record-keeping at the local level – so how would an aggrieved consumer even find the proper offending debt collector?
BlueHippo, Seller Of Computers On TV, Agrees To Pay Consumers
According to the Baltimore Sun, Maryland retailer BlueHippo has reached an agreement with the FTC to pay consumers up to $5 million to settle charges that it improperly took money from customers without providing the promised electronics.
Consumers will receive a claim form from the FTC if they:
Consumers may call the FTC’s consumer response center at 877-382-4357 with any questions. The federal agency will handle refunds.
In television and radio advertisements that aired around the country, BlueHippo promised to ship computers to customers after a down payment of $99 to $124, followed by a series of automatic withdrawals from their bank accounts, according to the FTC. But the deductions began before the company informed consumers that it had a no- refund policy if they canceled before delivery.
The FTC attorney said some buyers paid hundreds of dollars but did not receive the equipment in the promised amount of time.
“Consumers understood that after 13 weeks of payments they would have a computer shipped to them,” he said. When the computers didn’t arrive, “people stopped making payments because their product was not delivered.” But BlueHippo did not return the money.
The FTC alleged that by failing to ship merchandise in a reasonable time frame or denying consumers the right to cancel and get a refund, BlueHippo violated the FTC’s mail-order rule. Officials said the company also might have violated the federal Truth in Lending Act and its regulations by not giving consumers written disclosures before the transactions were made. The commission also alleged that the company violated the Electronic Fund Transfer Act and its regulations by offering credit on the condition of repayment by preauthorized debits.
Source: Baltimore Sun.
Credit Repair Scams: Avoid Bigger Problems Down The Road
Everyone wants to improve their credit score. But when trying to clean up your credit history, traps abound. According to a recent story on CNN.com, the Better Business Bureau is warning that some companies are using the credit crunch to take advantage of consumers who want to clean up their credit. Complaints against credit repair companies have increased more than 38% since 2004 according to the Better Business Bureau.
The bottom line here is that anything a credit repair company can do legally, is something that you can do yourself - for free.
Credit repair services are governed by the Credit Repair Organizations Act. This law requires that the service provide you with a one-page document that tells you what your rights are if you dispute inaccurate information with credit repair companies.
And now the biggie: Make sure you don’t pay for any services upfront. By law, a credit repair organization cannot charge a fee unless and until the repair is completed.
State Senator Works To Help Staten Island Residents Save Their Homes
More than 2,000 Staten Islanders are behind on their mortgage payments by at least a month, with some as much as 60 days delinquent and headed down the path toward foreclosure. Now, on February 24, 2008, a unique opportunity is going to allow those people to meet directly with banks to discuss ways to save their homes.
“Operation Protect Your Home,” co-sponsored by State Sen. Diane Savino (D-North Shore/Brooklyn), is part of a citywide effort launched by the state Senate Democratic Conference and New York Banking Department.
