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08-19-09
Albany, NY
Credit Card Issuers Are Making Changes in
Agreements and Terms In Advance of CARD Act’s
Full Implementation
NYS Consumer Protection Board Releases
Preliminary Results of its
Campaign for Change
Credit Card Reform Survey as Provisions of New
Law Take Effect
With the
first reforms of the Credit Card
Accountability, Responsibility, and
Disclosure (CARD) Act poised to take effect
tomorrow, the New York State Consumer
Protection Board (CPB) today released
preliminary results of its survey on
industry practices. Nearly 100 consumers
have responded thus far to the Agency’s
Campaign for Change Credit Card Reform
Survey, confirming that a variety of credit
card issuers are changing agreements and
terms prior to the implementation of
anticipated protections for cardholders.
Consumers
were asked to complete the survey and/or to
send the CPB stories beginning on May 28,
2009, just six days after President Obama
approved significant changes to the credit
card industry. While the survey period
extends until February 2010, when most of
the key provisions of the new law become
effective, the CPB conducted a preliminary
review of the responses received to date.
“The CARD Act
represents a victory for consumers who have
for years complained about arbitrary
increases in interest rates, fee hikes and
changes to account agreements without
adequate notice, but when the new law was
passed, we became concerned that the
industry might impose changes in advance of
the reforms to bolster their bottom line
before they could no longer exercise these
options,” said Mindy A. Bockstein. “Turns
out we were right to be apprehensive, as the
feedback we are receiving verifies that some
card issuers are indeed changing terms
during this interim period to impose
unilateral account changes, including
interest rate and late fee hikes even for
those consumers whose accounts are in good
standing.”
Of the
consumers who responded to the CPB’s Survey:
-
More than
90% of respondents stated that their
card issuer changed the terms of their
agreements.
-
Nearly
all respondents stated that the change
involved an increase in their interest
rate.
-
Many have
reported changes in fees, interest
rates, rewards programs and reductions
in the time available to pay bills.
-
62% said
their card issuer had raised interest
rates despite the fact that their
balance had been completely paid off at
the end of each billing period.
-
68% said
they were charged interest from the time
of purchase when their issuer had not
charged in this manner before.
“The CPB is
monitoring the actions of credit card companies
through our Campaign for Change,” added
Chairperson Bockstein. “These issuers have a
perfect opportunity to demonstrate that they
care about their customers during this interim
period by establishing policies now that comport
with the spirit of the soon-to-be fully
implemented law. Some are already implementing
the consumer protection strategies outlined in
the law ahead of schedule.”
Effective
tomorrow, credit card issuers must give 45 days’
advance notice to consumers of any changes in
interest rates on future purchases or other
significant changes after the first year of the
card’s activation. The notice must also advise
the consumer of the right to cancel the account.
Additionally, credit card issuers will have to
mail billing statements at least 21 days before
the due date, and, if there is a grace period,
the grace period must extend 21 days after the
statement is mailed.
Ultimately, the
CARD Act will:
-
Reduce
unannounced interest rate hikes;
-
Limit
arbitrary fees and charges;
-
Require
consumer opt-in to be assessed
over-the-limit fees;
-
Eliminate
inappropriate double-cycle billing;
-
Increase
protections for minors (under 21) from
aggressive marketing tactics; and, Require
greater disclosure to be provided to
consumers.
“I encourage
consumers to participate in the CPB’s Campaign
for Change by completing the Credit Card Reform
Survey and/or e-mailing us their personal
stories on credit card company performance,”
added Bockstein. “We are empowering consumers
who can assist us in protecting all of our
interests.”
The CPB’s
Credit Card Reform Survey
can be accessed on the Agency website at
http://www.nysconsumer.gov/pdf/credit_card_survey_2009.pdf.
The survey asks consumers to inform the CPB if
their bank or issuer has
changed the terms of their agreements, added any
new fees, increased fees or interest rates,
reduced the time available to pay bills, charged
interest from the time of purchase when that was
not formerly their procedure, charged interest
for previously paid balances, reduced credit
limits for no apparent reason, changed the terms
of a card’s rewards program or eliminated their
card’s rewards program altogether. Consumers
wishing to provide more detailed information may
e-mail their stories
to creditcardstory@consumer.state.ny.us.
Additional information about credit card usage
and management may be found on the CPB’s website
at
www.nysconsumer.gov.
The CPB respects
and advocates for strong and reasonable
information privacy policies. Therefore, answers
to the survey are completely anonymous. However,
the CPB may publish survey results and portions
of stories it receives to help illustrate the
impact of credit card reform. In the interest of
personal privacy, however, the CPB will never
use the name of a consumer without expressed
written permission.
The CPB,
established in 1970 by the New York State
Legislature, is the State’s top consumer
watchdog and think tank. The CPB’s core mission
is to protect New Yorkers by publicizing
unscrupulous and questionable business practices
and product recalls; conducting investigations
and hearings; enforcing the “Do Not Call” law;
researching issues; developing legislation;
creating consumer education programs and
materials; responding to individual marketplace
complaints by securing voluntary agreements;
and, representing the interests of consumers
before the Public Service Commission and other
State and federal agencies.
To file a
consumer complaint with the NYS Consumer
Protection Board (CPB), call our toll-free
hotline at 800-697-1220 or visit the CPB’s
website at www.nysconsumer.gov. In addition to
the online complaint form, the website is home
to important consumer safety information.
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