Despite recent laws passed to protect consumers from credit card abuse, abusive practices reportedly continue to pose a problem. Some abusive credit card practices include credit card rate hikes, credit card fraud, credit card late fees, credit card overlimit fees and credit card annual fees. Some credit card companies are also accused of illegal marketing practices.
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Credit CARD Act
In 2010, the Credit CARD (Card Accountability, Responsibility and Disclosure) Act went into effect. The act was designed to limit the amount of credit card abuse customers faced, but some companies are accused of continuing with abusive practices.
Under the Credit CARD Act, companies cannot automatically allow a card to go overlimit and cannot raise interest rates for one year after an account is opened. Once the year is up, lenders must give the cardholder 45 days' notice before issuing a rate hike.
Credit Card Abuse Practices
 Because the credit card companies could lose some of the revenue once generated by fees or interest rate hikes prior to the new laws taking effect, they are looking for other ways to increase their profits. Some companies are accused of illegally marketing optional products associated with credit cards. For example, Discover Financial Services faces a lawsuit alleging customer service representatives phoned Discover clients under the guise of alerting them to optional credit card products but then signed the customers up for those products—and charged them related fees—without the customer's knowledge or consent.
Other companies have taken to increasing balance transfer fees, charging cardholders if their accounts are not used frequently enough and eliminating grace periods on purchases.
Historically, credit card abuse lawsuits involved predatory practices such as unannounced rate increases, unannounced credit reductions, overlimit fees triggered solely by annual fees, and pre-approved and other special offers that are not honored. Some of these predatory practices are prohibited under the Credit CARD Act, but consumers should be aware of their rights to ensure credit card companies follow the CARD Act.
Credit Card Antitrust Lawsuit
Some states, including Utah, filed a lawsuit against Visa, MasterCard and American Express, alleging those companies violated antitrust laws by preventing merchants from encouraging customers to pay for their purchases with credit cards that have lower merchant fees. If the allegations are true, the companies could be guilty of restricting competition among credit card companies. Visa and MasterCard have reportedly agreed to settle the lawsuit, without admitting wrongdoing. American Express, however, is reportedly fighting the lawsuit.
Having the option of using credit cards that offer lower merchant fees could result in lower prices for consumers.
Credit Card Abuse Legal Help
If you have been a victim of any unfair practices by your credit card company, including substantial rate increases, unfair penalties or broken promises, and would like to take a stand by participating in an action against them, please click the link below to submit your credit card complaint to a concerned lawyer who will review your claim at no charge. There is also a special need for certain matters for California residents who can act as class representatives.
Last updated on Mar-7-11 |
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Home Page >> Hot Legal Issues >> Credit Card Rate Hikes
Washington, DC: Two new surveys released recently by the government indicated that reforms have led to the near elimination of credit card rate hikes and over-limit charges as well as a reduction in penalty fees, the Washington Post reports 
Washington, DC: The Supreme Court recently ruled that Chase Bank USA could legally implement credit card rate hikes on a man's card without notifying him, The Associated Press reports 
Sierra Madre, CA: Thus far, detectives have identified 282 credit card fraud victims at a gas station in Sierra Madre, California, the Los Angeles Times reports 
