Conference Report: Card Industry under Increased Scrutiny
November 14 2007
Source: CreditandCollectionsWorld.com and SourceMedia, Inc.
The credit card industry is under more scrutiny than ever before, according to Robert Froehl, senior counsel for mega-retailer Target Corp. Froehl spoke Sunday at the 16th annual Card Collection Conference in Phoenix.
There have been no less than four Congressional hearings and at least six new pieces of legislation drafted regarding card issuer practices this year, he says. Froehl cited a Senate hearing in January, and House hearings in April, June and August.
Among the proposed laws governing card issuer practices are bills that seek to prohibit overlimit fees when the creditor approves the charge, prohibiting use of a card by a minor without a parental co-signer, and a proposed credit limit-to-income test for college student card users – a test that would be required before issuing the card.
Other bills seek to: limit rate increases except to certain triggers agreed to by the cardholder; force issuers to apply cardholder payments to balances that have a higher interest rate first; and prohibit universal default, meaning card issuers may not assess a higher risk and interest rate to cardholders based on their payment history with other creditors, Froehl noted.
Movement is also afoot at the federal level, Froehl said, citing the Federal Reserve Board’s recently issued proposal to revise the Truth in Lending Act. The rule change is 200 pages long, he noted.