Senate committee bill seeks to protect consumers from deceptive and unfair credit card practices
The Senate Banking Committee recently passed the Credit Card Accountability, Responsibility, and Disclosure Act, which strives to protect consumers against some of the more deceptive and unfair credit card practices. Some of the provisions aim to:
- protect consumers from arbitrary interest rate increases
- end “bait and switch” tactics like promising a low interest rate then adding hidden fees and other charges
- prohibit credit card companies from increasing consumers’ interest rates based on their history with other credit cards
- ensure that cardholders are better informed of the terms of their credit card account
- protect young consumers against aggressive credit card solicitation efforts
The Act comes on the heels of FTC regulations that provides similar protections to consumers. But the FTC regulations are not scheduled to take effect until July of 2010. The Senate Act seeks to blunt the inevitable rush by credit card companies to raise interest rates and fees before the FTC regulations take effect. The Act narrowly passed the Senate Banking committee and figures to face stiff opposition from the credit card and banking industry before it reaches the full Senate for a vote. Predictably, the credit card industry has resorted to scare tactics, arguing that the Act will lead to less credit availability and higher prices for consumers.
The Act strikes me as a welcome and necessary piece of legislation. At a time when most major banks are receiving billions in bailout funds, it seems only fair to demand reasonable and common sense consumer protections in return. Stay tuned as this debate is just starting to heat up.