FTC sending checks to defrauded consumers

“On July 15, 2009, the Federal Trade Commission sent refund checks to consumers who allegedly had been defrauded in the case of FTC v. Integrity Financial Enterprises, LLC. Consumers who filed a claim with the FTC received checks averaging more than $200, which covered more than 85 percent of their losses. The refund checks must be cashed by September 13, 2009, or they become void.

In 2008, the FTC sued Integrity Financial Enterprises, LLC (which did business as Infinite Financial and National Benefits Exchange), National Benefits Exchange, Inc., and the companies’ owner, alleging that they promised consumers a “credit card” that could be used like a Visa or MasterCard for an up-front fee of $200 to $300, but which actually could be used only to buy products from the defendants’ Web site or catalog. The resulting court order and settlement in this case required the defendants to forfeit their financial assets to the FTC, which distributed the money to consumers who were harmed by the defendants’ conduct.”

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Credit Card Rate Hikes Require Warning

“Credit card users will have 45 days notice of rate increases and changes in terms, and more time between receiving a bill its payment being due, starting Aug. 20, according to a Federal Reserve rule implementing the Credit Card Act.      Credit card companies also must review each consumer account whose rates have been increased, to consider whether changes in the conditions leading to the increase call for a reduction in rates. Each of these accounts must be reviewed automatically at least once every six months, and credit risk calculations are not to take these reviews into account.”

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Mandatory credit card arbitration under attack

“Two major arbitration firms are backing away from the business of resolving disputes between customers and their credit-card and cellphone companies, throwing into disarray a controversial system that prevents unhappy consumers from filing lawsuits…

Although arbitration long has been controversial, the current situation developed rapidly starting last week when the Minnesota attorney general’s office sued the National Arbitration Forum, based in St. Louis Park, Minn., over the way it handled disputes. Among other things, the lawsuit contended that NAF didn’t disclose that it has financial ties to the debt-collection industry, violating Minnesota laws against consumer fraud, deceptive trade practices and false advertising.”

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Capital One credit card defaults increase

“Capital One Financial Corp’s (COF.N) U.S. credit card defaults rose in June as unemployment increased and Americans struggled to pay their debts, but the figures were better than expected and the company’s shares rose 3.2 percent.

In a regulatory filing on Wednesday, Capital One said the annualized net charge-off rate for U.S. credit cards — debts the company believes it will never collect — rose to 9.73 percent in June from 9.41 percent in May.”

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Chase credit card protection plan called a scam

“JP Morgan Chase and the Chase Bank abuse their so-called “Payment Protector Plan” by calling in loans and canceling enrollment for customers who are supposed to be protected by the plan, a class action claims in Federal Court.
     Chase claims its “Payment Protector Plan” protects credit cardholders who have lost their jobs or suffered a disability by freezing their monthly payments while Chase charges extra monthly fees. But if customers seek the protection Chase claims to offer the bank cancels the accounts and demands immediate payment in full, the class claims.”

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Downside to new credit card legislation?

The new credit card legislation will eliminate certain credit card practices (such as double-cycle billing, unlimited marketing to minors, and very short-lived introductory teaser interest rates). It will, by definition, benefit consumers who would otherwise be harmed by the practices that have been legislatively modified or eliminated. But will the legislation have any negative consequences for consumers? That issue is addressed here by Michelle Singletary in today’s Washington Post. Singletary discusses the possibility that credit card companies will respond to the new reforms by re-imposing the annual fees that had been largely eliminated in recent years. (And the credit card companies have warned that the new restrictions could lead to higher interest rates.)

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NY state worker stole taxpayer information

As if we need any more disincentive to pay our taxes:

“Walter Healey of Troy, N.Y., spent at least two of his 22 years with the department stealing taxpayer information, according to investigators. “The New York state Attorney General’s office says Healey worked in a Latham office of Taxation and Finance where they scanned in Social Security cards and birth certificates, and he used that information to apply for at least 90 fraudulent credit cards and lines of credit worth more than $200,000,” Fox23News.com reports. Healey allegedly even used information belonging to his late mother, his sister and a 4-year-old boy.

Department investigators were tipped off by a co-worker who thought Healey was acting oddly. Working with the attorney general’s office, investigators eventually found hundreds of pages of tax forms, documents and credit card statements in Healey’s home. “They also discovered approximately 2,000 Post-It notes with the Social Security numbers of New York taxpayers handwritten on them — many of them accompanied by handwritten notes such as ‘good prospect,’ ‘had money’ and ‘go with this one,'” according to a release from the Attorney General.

The attorney general’s office is working to contact victims, while state tax officials are notifying more than 2,000 individuals across New York whose information was accessed”

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Lexis Nexis suffers data breach

“LexisNexis acknowledged Friday that criminals used its information retrieval service for more than three years to gather data that was used to commit credit card fraud.

LexisNexis has started warning about 32,000 people that “a few” customers used its service to help them illegally obtain credit cards. “These individuals were operating businesses that at one time were both ChoicePoint and LexisNexis customers,” the company said in a notification letter that it began sending out Friday.

To perpetrate the scam, the fraudsters would set up fake mail boxes and then use information obtained on LexisNexis to open credit cards in the victims’ names. The criminals were able to obtain names, dates of birth, and even Social Security numbers from the data broker.”

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Credit card bill of rights passes House committee

The Credit Cardholders’ Bill of Rights (H.R. 627), sponsored by Rep. Carolyn B. Maloney (D-NY), was passed by a vote of 48 to 19.  The bill now moves to the House of Representatives for consideration. 

Press release from The House Financial Services Committee:

“The House Financial Services Committee today approved legislation that would provide credit card customers crucial protections against unfair, deceptive, and anti-competitive credit card practices, which include double-cycle billing, due-date gimmicks, and retroactive interest rate hikes. The bill would also increase the advance notice of impending rate hikes and give consumers the information and rights they need to manage their credit responsibly.”

Courtesy of Consumer Law & Policy Blog

New credit card rules proposed

The Federal Reserve and Office of Thrift Supervision had proposed new credit card rules which would do the following:

*Disallow companies that purchase a credit card division from changing the terms of credit cards for existing customers

*Nor can they make special offers of deferred interest and then change the terms through a “universal default” rate increase.

From the Consumer Law and Policy Blog