Consumer Justice Lawyer
The Law Offices of Angelo Marino, Jr. P.A.
NEW CREDIT CARD RULES AS OF FEBRUARY 22, 2010
December 2009 and January 2010 News Letter
CONSUMERLAWYERHELP.COM
December 2009 and January 2010 News Letter
THE NEW CREDIT CARD RULES AND PROTECTIONS FOR CONSUMERS.
By
Angelo "Tony" Marino
The Credit Card Accountability Responsibility and Disclosure (C.A.R.D.) Act of 2009 will provide many protections from abusive credit card practices. These provisions are supposed to be effective Feb. 22, 2010.
WHAT IT SAYS:
Creditors generally cannot raise interest rates, or any fees, during the first year after an account is opened, except:
* When the increase is due to a variable indexed interest rate. (Notice of incremental changes is not required.)
* At the end of a promotional rate period, provided that proper advance disclosures are provided and that the promotional period lasts at least six months. (No notice required when introductory rate expires.)
* If the required minimum payment is not received within 60 days after the due date. The consumer must be given 45 days advance notice and an option to cancel (as described below) as well as the reason of the increase. The notice must explain that the rate increase will terminate within six months if the creditor receives all minimum payments on time during that period.
NOTICE OF FUTURE INTEREST RATE INCREASES:
After the first year, the card issuer can raise the interest rate on future purchases (those made subsequent to the rate increase becoming effective), or make other "significant" changes in terms with 45 days advance notice. The notice shall advise the consumer of the right to cancel the account. No notice is required for changes to variable and promotional interest rates as set forth above. (The 45-day notice requirement and right to cancel are effective on Aug. 20, 2009—however the prohibition on changes in the first year does not take effect until Feb. 22, 2010.) ( THAT IS WHY EVERYONE RECEIVED OUTRAGEOUS INCREASES IN THEIR RATES THIS YEAR.)
INTEREST RATE INCREASES ON EXISTING BALANCES:
Even after the first year of an account’s opening, credit card issuers cannot raise interest rates on existing balances, except:
* When the increase is due to a variable indexed interest rate. (Notice of incremental changes is not required.)
* At the end of the promotional rate period, provided that proper up-front notice was given and that the promotional period is at least six months. (No notice required when introductory rate expires.)
* If the required minimum payment is not received within 60 days after the due date. The consumer must be given 45 days advance notice and option to cancel as described below as well as given notice for the reason for the interest rate increase and told that the interest rate increase will terminate within six months if the creditor receives the minimum payments on time during that period.
REPAYMENT OF OUTSTANDING BALANCES:
Although creditors can change terms on outstanding and future balances as described above, the creditor’s notice of the change in terms must explain that the consumer can cancel the account before the effective date of any change.
If the account is closed or cancelled by the consumer, the closed account will not be considered a default under the cardholder agreement and the creditor cannot require immediate repayment of the entire balance.
In addition the creditor must either:
* Structure the balance to be paid over at least five years; or
* Require a minimum monthly payment equal to a percentage of the balance that is no more than twice the percentage required for the old minimum payment. (Effective date: Aug. 20, 2009)
LIMITS ON FEES AND PENALTIES:
No over-limit fees may be charged unless the cardholder has given permission for transactions that exceed his or her credit limit.
An over-limit fee may be imposed only once per any billing cycle in which the balance is over the credit limit.
No fees can be charged to make a payment online, via telephone, by mail, or by other means, except for an expedited payment arranged live through a service representative.
A card issuer who increases the interest rate because of factors related to market conditions or credit risk must review the account every six months and decrease the rate if indicated by the review. The amount of the required rate decrease has not been specified. The Federal Reserve Board must issue rules regarding compliance with this requirement.
Penalty fees (late fees, over-limit fees, etc.) must be reasonable and proportional to the omission or violation of the card agreement. The Federal Reserve Board must issue rules to determine what fees are reasonable.
DOUBLE CYCLE BILLING:
Double cycle billing is generally prohibited. A creditor cannot reach back to the previous billing period when calculating the amount of interest charged in the current cycle.
ABILITY TO PAY:
Credit card issuers must consider the consumer’s ability to make the required payments before opening a new account or raising a consumer’s credit limit.
Application of payments (payment allocation)
Amounts in excess of the minimum payment must be applied to the balance with the highest interest rate, except during the last two billing statements before a deferred interest balance is due, where excess payments must be applied to the deferred balance.
PAYMENT DUE RATES:
Credit card issuers must mail the billing statement (or deliver it electronically) at least 21 days before the due date. (Effective date: Aug. 20, 2009)
If there is a grace period, the grace period must extend for at least a 21-day period after a statement is mailed. (Effective date: Aug. 20, 2009)
Credit card issuers must credit all payments received by 5 p.m. on that day.
Due dates must be on the same day each month, (i.e., the 1st of each month).
If the payment due date falls on non-business days, such as weekends or holidays, then the creditor cannot consider payments received on the next following business day to be late.
If a creditor accepts payments at local branches, the date a payment is made at the branch will be considered the date the payment is posted.
Increased disclosures
Creditors must disclose on the billing statement the period of time and total interest it will take to pay off a card balance if only minimum monthly payments are made, the monthly payment amount that would be required to pay off the card balance in 36 months and a toll free number for the consumer to call for credit counseling and debt management services.
Periodic statements must clearly and conspicuously disclose the required due date, late payment fee and late payment penalty rate if any.
CREDIT CARD AGREEMENTS:
Credit card agreements will be posted on the issuers’ websites for the benefit of cardholders. These agreements will also be publicly available on the Federal Reserve Board’s website.
Young consumers
Before issuing a card to a person under 21, the issuer must obtain an application, which contains either:
* The signature of a co-signer over 21 who will be jointly liable for debts incurred before the consumer reaches 21; or
* Information indicating an independent means of repaying extensions of credit on the card.
No pre--screened card offers can be made to persons under 21 unless they have consented to receive such offers.
Card issuers may not raise the credit limit on accounts held by a college student under 21 and a co-signer without written permission from the co-signer.
Card issuers cannot provide tangible gifts (having monetary value) to college students on or near campus, or at campus-sponsored events, in exchange for applying for credit.
Colleges must publicly disclose all marketing contracts made with credit card companies.
All card issuers must also submit an annual report to the Federal Reserve Board including the terms and conditions of all promotional agreements with colleges, including the number of accounts opened during the time period. These reports will be the basis of a report by the Federal Reserve Board to be given to Congress and the public.
Credit reports
Advertisements for free credit reports must state that free credit reports are available under federal law at AnnualCreditReport.com.
Subprime cards (‘fee harvester’ cards)
Where fees take up more than 25% of an available credit line, they cannot be deducted from the available line. For instance, a credit card has a limit of $200, and fees total $51, or over 25% of the available balance. A creditor cannot reduce the available balance by $51 to get its fees.
I know this is a lot of information. Just put in away in a safe place, or come back to the web site to get the information again.
I wish you all a HAPPY HOLIDAY AND A SUCCESSFUL NEW YEAR!
Be careful with the plastic!
Angelo "Tony" Marino, Jr.
CONSUMERLAWYERHELP.COM
November newsletter
CONSUMER LAWYER HELP
vol 1
Understanding gift cards:
Consumers spent an estimated $88 billion on gift cards last year, according to the research firm the Tower Group. It’s no wonder, as gift cards can swiftly solve the nagging holiday question: What should I get?
By some estimates, 40% of gifts that go to teens are gift cards. The cards give recipients the freedom to choose their own gifts, but as their popularity grows so do the complexities.
If you buy a general bank-issued gift card, with a Visa, Mastercard, American Express, or Discover logo on it, you can use the card in any store that accepts those credit/debit cards. Store, or retail, gift cards generally can only be used at a store, although they may also be used to purchase items at stores owned by the same parent company. For example, Gap gift cards are also redeemable at Banana Republic and Old Navy as well as associated online merchants.
Gift cards can vary widely when comparing fees, expiration dates, and replacement cards. Before you start your holiday shopping this season, you’ll want to know all card costs and conditions for you and the recipient.
Costs:
You may not realize that fees can vary greatly, particularly on general purpose gift cards issued by banks. In Maryland, the Montgomery County Office of Consumer Protection surveyed 20 gift cards in 2007 and found that all of them charged both a purchase/processing fee (from $2 to $10.90) and monthly maintenance fees ($1.25 to $4.95). Bank-issued gift cards are versatile but can be very costly. When you purchase a gift card you may be surprised to learn how many different fees can be attached. Cards may carry purchase fees, activation fees, maintenance/monthly fees, reloading fees, transaction fee, balance inquiry fees, inactivity/dormancy fees and replacement card fees. These extra charges can eat up your gift before you realize it. Even cards with no expiration dates will expire if fees eventually consume the card’s value. The bank that issues the gift card sets the fees. For instance, Chase sells a prepaid Visa debit card for $3.50, plus a $4.95 shipping fee if you buy it online ($15.95 for rush orders). It also carries a $2.50 monthly fee after the first year, and a $12 cancellation fee if you’d like the balance returned to you. If registered, a lost card can be replaced for $12. Wells Fargo also charges $2.50 per month after 12 months for its prepaid gift card, and a $15 “balance transfer fee” if the card expires and you want to cash out. Wells also warns customers that an extra 20% of the purchase price may be put on “hold” when used at gas stations, restaurants and hotels to cover routine blocks and extra charges like tips, etc. (These holds are placed on credit cards as well).
The
In the
Use it or lose it?
Consumer Reports surveyed 1,000 gift cardholders in late 2007. About a quarter (27%) had not used a gift card they received the previous holiday season. The Tower Group estimates that consumers lost about $8 billion in unused gift card balances in 2006. Some of those cards will have expired, others will have only small sums remaining. In some cases the unused money goes to states’ abandoned or unclaimed funds departments. The law may call the unclaimed funds “escheats.” Contact the National Conference of State Legislatures to see if your state has a law that entitles you to collect unclaimed gift card funds. Visit National Conference of State Legislatures website and enter “gift cards” in the search box.
Problems?
If the gift card you counted on turns up missing, some issuers will replace the card as long as you registered it before the card was lost or stolen. Some cards use a PIN system for security. If you can supply a gift card receipt and a PIN number, the card will be replaced—as long as the funds have not been spent already. So contact the issuer as soon as possible. Also be aware that Visa and Mastercard “zero liability” policies do not extend to all PIN transactions on gift cards. Gift card losses may mean you’re out of luck—and money. If there’s a mistake with a card transaction or if you want to return the merchandise, your rights depend on store policy. You will have to take up your complaint with the merchant and/or gift card issuer. In some cases, stores will need the card in order to refund your money on returns, so don’t throw it away until you are sure it won’t be needed. The Federal Reserve is considering whether gift cards will have any legal protections if a card is lost or stolen, or if there is a billing dispute. For now, any protections are purely at the card company’s discretion and can disappear at any time.
Even without full legal protection, if you have a gift card problem there is some help available:
* For store gift cards, contact the Federal Trade Commission or 877-FTC-HELP.
* For bank-issued gift cards, file a complaint with your state Attorney General’s office and the Comptroller of the Currency (OCC) at customer.assistance@occ.treas.gov or call 800-613-6743.
When giving gift cards:
* Include the receipt and wrapper
* Consider fees associated with the card
* Does the card expire?
* Can it be replaced?
* Is it convenient for the recipient?
New gift card rules next year:
Gift cards can relieve gift givers of the dilemma of what to get, and allow recipients to buy something they really want. But gift cards’ monthly maintenance fees and expiration dates have often caught users unaware. Recently, these practices prompted Congress to act on behalf of cardholders.
When Congress enacted the Credit CARD Act in early 2009, a portion of the law was devoted to providing consumers with stronger disclosures on gift cards. But gift cards purchased this holiday season will not be eligible for the new protections.
Coming August 2010
The new law, which takes effect in August 2010, applies to both bank-issued and retail gift cards. It does not cover loyalty cards, phone cards, or reloadable general-purpose pre-paid cards. (That means a Walmart prepaid card is exempt from the law, while an American Express gift card is covered.). The new law will:
* Prohibit all gift cards from expiring before five years.Prohibit inactivity/dormancy fees for the first year.
* Limit inactivity/dormancy fees to one a month thereafter.
* Allow stronger state laws to continue to apply.
In addition, the new federal law gives the Federal Reserve the authority to write rules that could cap gift card fees, provide fraud protection, and more. Proposed rules, expected by year’s end, will explain what fees are allowed and when, and if gift cards will be eligible for billing error dispute rights and other protections under the Electronic Funds Transfer Act.
State consumer protections:
More than 30 states have passed laws regulating gift cards. To learn if your state has protections that go beyond the new national law, check out Consumers Union’s state-by-state summary of gift card laws. Find the document at Consumers Union website by searching for “gift card laws.” For example,
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I hope this information has been helpful. Please email me at amjrpamail@aol.com to suggest legal topics you would like me to cover.
Have a wonderful holiday season!
Sincerely,
Angelo “Tony” Marino, Jr.
Board Certified Civil Trial Lawyer
645 SE 5 Terrace
Ft
http://www.consumerlawyerhelp.com/
email: amjrpamail@aol.com
954-765-0537 work
954-765-0545 facsimile
