A little over three years after the United States Congress passed the Credit Card Accountability Responsibility and Disclosure Act (CARD), the Consumer Financial Protection Bureau has released a report detailing the impact the Act has had. The overarching conclusion reached is that the Act has been a success, and saved consumers billions of dollars that they would have otherwise paid in a variety of fees and penalties.
However, it was known even before the law was passed that the banks wouldn’t easily give up those profits, they would simply raise fees elsewhere, invent new fees and penalties, and generally increase the cost of borrowing and owning an account. Many examples of this were seen prior to enactment, and banks began changing the terms of cardholder agreements to include new fees, new penalties, monthly fees, yearly fees, transaction fees, variable interest rates, drastically increasing interest rates, and a variety of other gouging tactics.
For many borrowers, banks simply closed their accounts, leaving countless business and families that relied on the use of credit out in the cold, forced to close shop, file bankruptcy, or default on other obligations.
This new report highlights the same type of conduct persisting today, as banks have carefully examined the law, found loopholes and areas of non regulation, and introduced are variety of new fees and tactics to gouge consumers. The Consumer Financial Protection Bureau specifically identified six broad areas where banks are engaging in deplorable and deceptive conduct, and will likely be the subject of future scrutiny. One example of such fraudulent practices reached conclusion just last month, when the Consumer Financial Protection Bureau ordered Chase Bank USA and JPMorgan Chase Bank NA to refund approximately $309 Million to consumers for illegal credit card practices. Chase Bank and JPMorgan had been charging consumers for add on products, such as fraud monitoring, without actually providing the services. You can read more about that here: Chase Bank Ordered to Pay $309 Million for Illegal Practices
As a practicing bankruptcy, debt collection defense, and consumer protection attorney in San Diego, I still tell every client to always be very wary of banks. The CARD act solved a lot of big problems, and the Consumer Financial Protection Bureau does outstanding work, but they cannot solve or prevent every problem, it’s simply not possible. The banks are in business to make as much money off of you as possible, and they will never stop changing tactics. And has been seen repeatedly, if they can’t make money honestly and legally, they will resort to illegal and dishonest practices. So make sure you know your rights, and if you must borrow from a bank, read everything very carefully. And when you think you’re being scammed or defrauded, report it or hire an attorney.
If you have a complaint about a bank you can submit it to the Consumer Financial Protection Bureau here: http://www.consumerfinance.gov/complaint/
You can also read the CARD act report here: http://www.consumerfinance.gov/reports/card-act-report/