Credit Card Holder’s Bill of Rights a Good Idea
By Bankruptcy Attorney on Feb 1, 2007 in General Bankruptcy Information
From the Consumer Law and Policy blog comes this open letter from Craig Jordan, a Texas consumer lawyer, to Senator Chris Dodd in the wake of last week’s congressional hearings on the credit card industry.
One of the best provisions, in my opinion, is this excerpt:
5. No credit card company shall charge any fee in excess of the reasonable average cost to the company of the event or circumstance which gives rise to the fee. Before charging any fee, a credit card company shall include in the card holder agreement an explanation of how the amount of the fee was determined and what relationship it bears to the cost of the event or circumstance giving rise to the fee.
This seems at once both common sense and radical. It’s common sense in that it relates pretty strongly to the kinds of values most of us learned in kindergarten - play nice, be fair, don’t be greedy, share your stuff nicely. It’s radical, though, in this capitalist society which seems at times to approve the unchecked greed of its corporations. We seem to be telling them, “If you can get someone to pay you that much, go for it.”
But it’s different with fees, especially when we’re talking about the credit industry. Sure, creditors are entitled to make a reasonable profit on their activities. But that profit comes from the interest they charge on the extended credit. However, lately more and more creditors are making fees not just a way to recoup expenses, but as another profit center. Limiting the fees to a reasonable approximation of what the causation event really cost the creditor is a bold step towards bringing that playing field more in line with “level.”
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