May 28, 2011
OK, so from the looks of things here, old FIA Card Services hasn’t conducted a reasonable investigation into a consumer’s fraud claim per the Fair Credit Reporting Act. Big surprise??? NOT!!! As a matter of fact, the judge’s memorandum and opinion states that the consumer “asked to speak to a manager about this determination and claims that the manager called her a liar, laughed at her, and hung up.” Way to go FIA Card Services! Oh, again, NOT!
Below is an excerpt from the case:
Nancy Meyer was the victim of fraud when her live-in fiancé stole convenience checks from two of her credit cards and forged her signature to cash those checks. The question presented in this motion is whether defendant F.I.A. Card Services, N.A. (“FIA”) has shown its investigation into that fraud was reasonable such that, as a matter of law, it met its obligations under the Fair Credit Reporting Act when Meyer alerted it to the fraud. Since FIA knew the nature of the fraud and had specific requests from credit reporting agencies (“CRAs”) to verify the signatures on the checks, which it did not do, the Court finds that FIA has not made such a showing and denies FIA’s motion for summary judgment.
Meyer v FIA Card Services (D. Minn., Civil No: 09-2726)
The FTC has settled two actions that charged marketers with deceptively claiming they could reduce consumers’ credit card interest rates. Both operations allegedly made deceptive telemarketing calls, called consumers on the Do Not Call Registry, and used illegal robocalls. The settlements will ban all of the defendants from selling debt relief services. (more…)
February 24, 2010
Housing Wire – In what it is calling a historic trend reversal, credit score provider FICO, is seeing more borrowers with a high credit score preferring to pay their monthly credit card bill over their mortgage.
“We’re identifying lending industry situations in FICO Score Trends that to our knowledge have never been seen before,” said Dr. Mark Greene, CEO of FICO, in a statement. “Economic instability is creating unknown risk in lenders’ credit portfolios as well as counter-intuitive trends in consumer behavior.”
The shift to a consumer preference to stay current on unsecured debt, as opposed to secured debt, began last year. In 2009, 0.3 percent of consumers with FICO scores between 760-789 defaulted on real estate loans, compared to 0.1 percent who defaulted on credit cards. In 2005, credit card delinquency risk was three times greater than today. In 2008, the lower to credit cards being just 1.6 times more likely to become 90 days delinquent than were mortgage loans.
The results echo data released by credit info provider, TransUnion, earlier this month. That study from earlier this month, found the share of borrowers who are delinquent on their mortgages but current on their credit cards rose to 6.6% as of Q309 (from 4.3% in Q108). At the same time, the share of borrowers that are delinquent on credit cards but current on their mortgages slipped to 3.6% from 4.1%.
January 25, 2010
Attorney General Darrell McGraw has sued Capital One Bank (USA), N.A. and four other companies in the Circuit Court of Mason County for unfair and deceptive acts and practices, unlawful debt collection practices, and unconscionable conduct in connection with their credit card lending and collection practices.
Capital One Bank (USA) is a national bank headquartered in Glen Allen, Virginia. It has about 500,000 credit card accounts with West Virginia consumers. Capital One Services, LLC, Capital One Services II, LLC, Capital One Services III, LLC, and COSI Receivables Management, LLC are Delaware corporations that service and collect on the credit cards issued by Capital One Bank.
The complaint filed in Mason County is based on numerous violations of West Virginia’s consumer protection laws. The complaint alleges that Capital One solicited consumers to enter into debt repayment plans by sending them solicitations that were disguised as offers of new credit. The offer was sent to consumers who had charged-off accounts with Capital One or other creditors. Under the terms of the offer, Capital One agreed to provide the consumer $1.00 of new credit in exchange for the consumer’s agreeing to transfer the entire account balance of a charged-off account to the new credit card account. The consumer was required to make payments on the old debt in order to receive any further increases in the credit limit on their new credit card.
By transferring the old debt onto a new credit card, Capital One was able to charge interest, late fees, and over-the-limit fees on debt that otherwise would not have been subject to those fees. It also allowed Capital One to re-age the debts so that the applicable statute of limitations period started new.
The complaint also alleges that Capital One: issued multiple low-limit credit cards, each charging exorbitant fees, rather than raising credit limits on consumers’ existing accounts; unconscionably imposed over-the-limit fees on consumers’ accounts; sold services to consumers who could not benefit from the services; and, billed and attempted to collect for credit card accounts that were never activated.
Attorney General McGraw stated, “Capital One’s practice of offering nominal extension of credit, if and only if, the consumer agreed to pay off a debt too old to be sued on is tantamount to loan sharking.” Until recently, the Attorney General was under a federal court injunction that prohibited him from suing the bank for its credit card practices; however, on January 4, 2010 United States District Court Judge Robert Goodwin granted the Attorney General’s motion to modify the injunction. Under the new order, the Attorney General is not prohibited from suing the bank to enforce non-preempted substantive state laws.
For more information or to file a complaint, please contact the Attorney General’s Consumer Protection Division. Call 1-800-368-8808, write to P.O. Box 1789, Charleston, WV 25326-1789, or visit his website at wvago.gov.
October 20, 2009
MSNBC – Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.
Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was “closed at credit grantor’s request” on the Shell MasterCard account.
“They said there was a routine review,” said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.
Burdette isn’t alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.
Citi confirmed the basics. The bank said in a statement it “decided to close a limited number of oil partner co-branded MasterCard accounts.” That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.
The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.
But unlike the bank’s move to shut down its Home Depot cards, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3 percent cash back on fuel purchases and 1 percent cash back on other spending.
No law, including the Credit CARD Act that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit card agreements.
Citi would not say why the cards in question were shut down, issuing a statement that said only it continuously evaluates its products.
“It is kind of an extraordinary action, but these are extraordinary times,” said Ben Woolsey, director of marketing and consumer research for CreditCards.com.
He noted that Citi is not the healthiest bank. In fact, Citi posted $8 billion in consumer credit losses for its third quarter last week, including both mortgages and credit cards. Like many banks with big consumer lending portfolios, Citi is expecting defaults on credit cards to rise in coming months. Credit card delinquencies typically track the unemployment rate, which is at 9.8 percent and is expected to top 10 percent soon.
Analysts noted following the earnings report that Citi has sharply reduced its outstanding credit to consumers.
A card being closed may, but does not always, damage a person’s credit score.
Such scores, which lenders use to determine if you’re a good credit risk, take into account a series of factors, including how long you’ve had credit accounts, your payment history and the balance versus available credit.
It could be that last factor that hurts consumers most, said John Ulzheimer, president of educational services for Credit.com. If a consumer had a high credit limit on the closed account, and that credit is no longer available, it could alter the “utilization ratio” for the person’s remaining credit. If another type of credit carries a high balance, the loss of the credit line could push down their score.
Ulzheimer said banks have been routinely making such moves in the past year and a half, mostly on a case-by-case basis. “Every once in a while you’ll get a huge pop in one particular card product,” he said.
Card holders who think their cards were unfairly shut down can try to contact the bank and ask for reinstatement, but Ulzheimer didn’t hold out much hope for success. “In this environment,” he said, “it’s not as successful as it was in the heyday of credit cards, where you could in fact call and plead your case.”
September 14, 2009
I had a BOA credit card with $20,500 limit. I called to dispute an auto warranty charge that was cancelled within the 30 day “review” period. The quick talking customer rep stated that with my long term status and excellent credit, I qualified for the 0% first year credit card. I could swith my limit to it.
I asked to keep the first one open with $5000 and the other transferred to the new card. Imagine my surprize when I got several credit alerts on my credit monitoring of my 853 going to 830. Well, the new card came and it was $5000 and the old card was also reduced to $5000! New card only good for cash advances and balance transfers.
I called to find out what was going on and they said that due to the banking industry, all banks were doing this! I told her that I have a federal job, paying $60,000 yr/no prospect of being laid off, paid off house and cars, so why was I a risk????
Told them to cancel the new card and put the rest back on the higher interest, but longer established card. I’m hopping mad. Is this truly a new banking thing or did they just pull a fast one on me? I’m so mad, I would like to close out the card! I liked to know I had the high balance “just in case” of emergency. Didn’t this just lower my score? She said no. I think it is BS.
Your opinion???? Thanks for all your good advise!
August 26, 2009
LA TIMES – Consumer advocates have long maintained that one of the more unfair practices in the business world is a provision in many service contracts preventing customers from joining class-action lawsuits and having to submit instead to binding arbitration to settle disputes.
Arbitration, critics say, typically favors businesses over consumers. And it’s not worth most people’s time to arbitrate nickel-and-dime issues that could be more practically dealt with in court.
So it was big news recently when Bank of America announced it would be the first major financial institution to no longer require that disgruntled credit card, banking and loan customers arbitrate any grievances.
Most media outlets characterized BofA’s move as good for consumers and bad for the bank’s lawyers, who now face a deluge of lawsuits.
Apparently it didn’t occur to any of them to ask whether scrapping the arbitration requirement also meant BofA was doing away with its prohibition on customers joining class-action lawsuits.
I did. And it hasn’t.
So although BofA’s decision means you no longer are forced into arbitration, you still can’t team up with other customers who have the same complaint and sue the bank.
You’ll have to fend for yourself, paying any legal expenses and dealing with any hassles. And that assumes you could even find a lawyer willing to take on a case involving what most would deem pocket change.
“Dropping the arbitration requirement is a useful step, but it’s only a half-step,” said Gail Hillebrand, a senior attorney with Consumers Union. “They still want the ability to ban customers from banding together.”
Class-action lawsuits are frequently abused by plaintiffs and attorneys whose only goal is to walk away with a share of some fat settlement.
But they’re also arguably the best tool many consumers have to address problems involving relatively small amounts of money. Individual lawsuits, even in Small Claims Court, can often cost more to resolve than the amount under dispute.
Betty Riess, a BofA spokeswoman, told me the bank still believed arbitration was a fair and efficient means of resolving disputes.
“But we have heard that some customers have not experienced the anticipated benefits of arbitration,” she said. “So we decided that it would be best for customers, and best for the bank, to discontinue the practice.”
Actually, most observers think BofA was responding to a decision last month by the National Arbitration Forum, the biggest provider of arbitration services, to stop handling credit card disputes.
The organization was sued by Minnesota’s attorney general for alleged fraud, deceptive trade practices and false advertising because it allegedly hid its financial ties to the very credit card companies whose disputes it was handling. The American Arbitration Assn. also said it would stop arbitrating consumer debt collection.
“Bank of America didn’t want to get sued too,” said Hillebrand, adding that other banks are expected to follow BofA’s lead in dropping arbitration provisions in their contracts.
When I asked BofA’s Riess whether the bank had scrapped its prohibition on customers joining class-action suits, it took several attempts before she could muster a straightforward response.
“We aren’t addressing the class-action waivers as part of this decision,” she finally said. “We will preserve the class-action waivers in our agreements.”
So what should customers do?
“We would hope that people would just deal with us directly,” Riess said.
Sure. Because if you can’t get a fair shake from your bank, who can you turn to?
A bill for a bill
Speaking of warm customer relations, our friends at T-Mobile are notifying wireless customers that if they want to receive a monthly bill in the mail, it could cost them almost $3.50.
That’s $1.50 a month for a mere summary of phone charges, and an additional $1.99 for a detailed account of all calls made and all charges.
That comes to $3.49 monthly or nearly $42 a year — just to receive your bill.
A T-Mobile spokeswoman said the fee was levied “after considering a number of factors, including rising costs for paper, printing and postage, as well as environmental impacts associated with printing paper bills.”
Neither Verizon Wireless nor AT&T Wireless hits customers with an additional charge for receiving bills by mail.
Let’s be clear: Saving trees is a good thing. And it’s good for businesses and their customers to be environmentally conscious. Paperless billing is terrific — as long as it’s something you want.
But those who, for whatever reason, are more comfortable with paper bills shouldn’t be punished for their preference.
Moreover, such fees disproportionately fall on senior citizens and lower-income people — those who may not have regular access to the Internet.
Sherman Oaks resident Margery Pope, 72, said she’s open to paperless billing. But she resents being strong-armed into the decision by T-Mobile.
“It shouldn’t cost me extra to see what I’m being billed for,” Pope said. “It’s their job to let me know what I’m paying for.”
Maybe she should think about suing the company. Oh, wait — T-Mobile’s contract requires that customers submit to binding arbitration.
July 11, 2009
Other companies started cutting cardholders’ credit lines when charges appeared for pawnshops or marriage therapy because data indicated those were signs of desperation or depression that might lead to job loss.
Most of the major credit-card companies have set up systems to comb through cardholders’ data for signs that someone is going to stop making payments. Are cardholders suddenly logging in at 1 in the morning? It might signal sleeplessness due to anxiety. Are they using their cards for groceries? It might mean they are trying to conserve their cash. Have they started using their cards for therapy sessions? Do they call the card company in the middle of the day, when they should be at work? What do they say when a customer-service representative asks how they’re feeling? Are their sighs long or short? Do they respond better to a comforting or bullying tone?
What Does Your Credit-Card Company Know About You?
June 25, 2009
Consumer Affairs – Thousands of Chase credit card customers have gotten some bad news this month. The bank has informed them that the minimum monthly payment on their accounts is being raised from two percent of the balance to five percent.
That might not sound like a huge increase, but for many who are carrying large balances and are tightly budgeted, it’s a severe and unexpected blow. Kay, of Pottsville, Pennsylvania, said she contacted Chase and was told the change in policy was related to the poor economy.
“I was told I could possibly re-negiotate a lesser monthly payment but my interest would go from 3.9 percent to 21.99 percent. I was told that out of over a billion credit card holders 850,000 were effected by this change,” she told Consumeraffairs.com. “My monthly payment from my four accounts will go from $961.00 a month to $2394.00 a month. Needless to say I will not be able to make these payments and will end up defaulting on my accounts and probably claim bankruptcy.”
The change in minimum payment has little to do with how long customers have been Chase cardholders, or their credit ratings, though in an analysis of complaints to Consumeraffairs.com in the last few days, many customers do seem to have one thing in common. They all mention that they took advantage of a previous promotion and signed up for a Chase credit card, with the promise of a low, fixed rate for an extended period of time.
“In the past year I took advantage of balance transfer offers with their life-of-the-loan low interest rate offers of 5.99 and 6.99,” Wendy, of Cardiff By The Sea, California, told Consumeraffairs.com. “I basically used the card as debt consolidation this year in lieu of the economy, wanting to close some other accounts and just use the Chase card to pay this amount down. I am horrified at the new five percent minimum! This will increase my payment by about $475 a month.”
Dana of Dacula, Georgia, also took advantage of the promotion and transferred money to a Chase account at 4.9 percent. In August her minimum monthly payment goes from two percent to five percent.
“This could put me in default since it would cause my payment to more than double each month,” she told Consumeraffairs.com. “I do not want to use the card, I just want to pay it with the terms I agreed to when the card was issued.”
With new credit card rules on the way, thanks to changes by regulators and legislation passed by Congress, lenders are preparing for a new consumer lending environment. By increasing its minimum monthly payment for customers with low, fixed interest rates, Chase recovers that low-interest money faster, and can loan it out again at much higher rates.
The new credit card rules that go into effect next year prevent lenders from arbitrarily raising interest rates, but do not address the issue of minimum monthly payments. In fact, regulators in the past have encouraged lenders to increase the minimum payments, so that consumers pay down their balances faster.
But a number of consumers who thought they were doing the smart thing — transferring large balances to cards with locked in, low rates, are finding themselves in a trap. The increased minimum payment is now unaffordable. The price of keeping their payment the same is to give up that promised low rate, so that more of their monthly payment goes to interest each month, not paying down the principal.
June 17, 2009
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I have 2 credit card accounts w/ B of A for a total of $30000.00. B of A has come to us with an offer to settle for $10900.00 and has further reduced that to $8900.00. They state the accounts are to be written off on June 30 2009.
My question is…is there a way to avoid the IRS coming at me for the difference. We are in pretty much an insolvent situation where we also owe the IRS over $20000 and our home is close to being upside down.
They are offering $8900.00 pay able in 3 months which will be extremely difficult to achieve. We could do $5000 if I borrowed from a relative. Any tips and/or advice would be greatly appreciated………Your site was recommended to me by a friend that used it to her great satisfaction
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