After this week's hearing on the credit card industry, Texas consumer lawyer Craig Jordan sent the following letter to Chris Dodd, outlining a "Credit Card Holder's Bill of Rights." I asked Craig if he would let us reprint the letter here because I thought our readers would find his commonsense proposal worth reading.
Dear Senator Dodd:
I am a consumer lawyer with over 20 years experience representing consumers, both as an assistant attorney general for the State of Texas and as a private attorney. I commend your recent hearings on the credit card industry and I hope that you will take action to stop some of the serious problems the industry causes for consumers.
I believe, based upon my daily representation of consumers with problems relating to their credit cards accounts, that the industry has entirely lost touch with the basic concepts of fair play and honest dealing. To remedy the most serious problems I have published on my law firm website a credit card holder's bill of rights:
Credit Card Holder's Bill of Rights
1. No credit card company shall hold a card holder in default for any reason other than failure to make timely payments on the account being declared in default.
2. No credit card company shall change the interest rate payable on the existing balance of an account except pursuant to a previously agreed variable rate agreement in which the interest rate is tied to a published market rate.
3. No credit card company shall change the interest rate payable on future transactions unless the card holder has a meaningful opportunity to reject the change and pay off the account at the existing interest rate.
4. No credit card company shall make any change to the terms of its agreement with a card holder unless that change applies only to future transactions and the card holder has a meaningful opportunity to reject the change and pay off the account pursuant to the existing terms.
5. No credit card company shall charge any fee in excess of the reasonable average cost to the company of the event or circumstance which gives rise to the fee. Before charging any fee, a credit card company shall include in the card holder agreement an explanation of how the amount of the fee was determined and what relationship it bears to the cost of the event or circumstance giving rise to the fee.
6. No credit card company shall require a minimum payment that does not reduce the balance due on the account by less than 2%.
7. No credit card company shall mail a monthly statement to a card holder less than 21 days before the due date of the cardholder's next payment.
8. No credit card company shall fail to credit an account with payment on the date that payment is received and no credit card company shall require payments to be received prior to 5:00 p.m. local time at the place of receipt in order to be deemed received on that date.
9. No credit card company shall require a customer to submit any claim or grievance to mandatory binding arbitration.
10. No credit card company shall sell or refer a charged off account to a debt collector without providing the debt collector with the date upon which the account was last current before it was charged off and all other information necessary for the debt collector to comply with the requirements of state and federal laws relating to debt collection and credit reporting.
11. No credit card company shall fail to provide a copy of the account application, agreement, or history to a card holder upon request or charge any fee for doing so.
These are common sense principles that most American businesses already follow. It is unfortunate that it will take Congressional action to force the credit card industry to return to basic main street business practices.
Thank you for your consideration.