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Monday, 7 December 2009
Saturday, 24 October 2009
Credit Cards or Misery Cards...
By SS Kumar (CMD Astral Systems India Pvt Ltd).
In keeping with the spread of sophisticated life styles in the west, the credit cards phenomenon has invaded India and most people have gotten so used to it that they can not live with out it. However, unlike in the west, the dice here in India is totally loaded against the user as the Reserve Bank of India is able to do very little in securing the user, says SS Kumar.
The following are the ways in which card issuing banks try to fleece the card holder:
Late fee
Disputed Claims
Biggest fraud through sale of policies on phone
Why do the banks charge exorbitant interest rates in India?
Life time membership fee fraud
Wednesday, 17 June 2009
GE Money continues using threats...
One of our members has lodged a specific complaint against GE Money.
It seems GE Money issued her a cash card some years back. She used the card and some time in 2006 fell in default due to non-payment of her dues.
She was offered a one-time settlement by an officer of GE Money at 18,000 rupees. The lady paid the amount to the officer in good faith but failed to take a settlement letter or receipt of the money she paid as the officer sitting in the Mahim office assured her that a letter takes time and it will be delivered to her home.
Then for two years she did not hear anything from GE Money. Suddenly in 2009, the company has started calling her again. The company now informs her that the gentleman she had paid the money to in no longer in the service of the company and there is no record of the money that she paid as one time settlement.
The caller who is harassing our member has threatened to have her arrested. He calls our member and places the call on conference with a police officer (identified as Patil) from the Mahim police station.
Questions that we raise are:
1. Why did GE Money keep quite for 2 years after the member had already paid and entered into a one time settlement with the company?
2. Why did she not receive any bills for this period and why is she suddenly getting a bill of 98000?
3. The matter of money lending and borrowing is at best a civil offense, why is police getting involved in all this?
4. We have reason to believe that the police personnel who is coming on the conference call is an employee of the company as he has failed to provide his designation and contact information including his police identification. In such case, why GE Money recovery officer should not be tried for impersonation of a police official?
Members are advised to be aware of this new tactics being adopted by credit card companies and private MNC involved in lending money.
It seems GE Money issued her a cash card some years back. She used the card and some time in 2006 fell in default due to non-payment of her dues.
She was offered a one-time settlement by an officer of GE Money at 18,000 rupees. The lady paid the amount to the officer in good faith but failed to take a settlement letter or receipt of the money she paid as the officer sitting in the Mahim office assured her that a letter takes time and it will be delivered to her home.
Then for two years she did not hear anything from GE Money. Suddenly in 2009, the company has started calling her again. The company now informs her that the gentleman she had paid the money to in no longer in the service of the company and there is no record of the money that she paid as one time settlement.
The caller who is harassing our member has threatened to have her arrested. He calls our member and places the call on conference with a police officer (identified as Patil) from the Mahim police station.
Questions that we raise are:
1. Why did GE Money keep quite for 2 years after the member had already paid and entered into a one time settlement with the company?
2. Why did she not receive any bills for this period and why is she suddenly getting a bill of 98000?
3. The matter of money lending and borrowing is at best a civil offense, why is police getting involved in all this?
4. We have reason to believe that the police personnel who is coming on the conference call is an employee of the company as he has failed to provide his designation and contact information including his police identification. In such case, why GE Money recovery officer should not be tried for impersonation of a police official?
Members are advised to be aware of this new tactics being adopted by credit card companies and private MNC involved in lending money.
Wednesday, 6 May 2009
While Credit Card companies get smashed in US, politicians in India Sleep
Credit card companies use a variety of unfair practices to trap consumers in a cycle of over-priced debt. The companies are allowed by law and by regulators to raise your rates for any reason, including no reason. They are allowed to operate nationally out of states, like Delaware and South Dakota, with weak consumer laws and no limits on interest rates or fees. No matter where you live, even in a state with strong laws, the weak pro-industry laws of those states govern your contract.
Consumers should either pay balances in full, or make the largest payments they can afford, and always pay early in the cycle to avoid late fees and, worse, having their rates jacked to penalty levels only a loan shark would love—36% APR or more.
For years, credit card companies were the most profitable form of banking, according to the Federal Reserve. But to ratchet up profits even more, they have recently numerous “trick, trap and gotcha” practices.
First, they started tricking consumers by advancing long-standing regular due dates all of a sudden by as much as 5 days or more to trick consumers into paying late. They put due dates on weekends and claimed that bills received after 12 noon or 1pm were late. They started imposing late fees not when bills were 30 days late, but as little as one minute or one day late. The regulators allowed this. Then, even after raising late fees to $39 or more, they claimed that being late also allowed them to jack interest rates by three times or more to 36% APR or even more.
Then, they started claiming that even if your payment history to them was perfect, they could jack your interest rate if your credit score declined (which could happen due to identity theft or numerous innocent reasons) or if you were late to some other creditor. They called this universal default.
Then, as the third strike against consumers, they invoked the extremely unfair “change the rules for any reason, including no reason” clause and started raising interest rates for no reason at all. This outraged Americans who started complaining to the Federal Reserve. Over 60,000 consumers complained. The normally somnolent agency woke up. It agreed with Maloney and Dodd that these and certain other practices were unfair. They proposed and on December 18, 2008 finalized, rules that make the practices illegal. In the past, the Fed had relied solely on disclosure to “protect” consumers. This was a major step.
But the Fed gave the banks until July 2010 to comply with the rules. So, it is important that Congress passes a law that takes effect more quickly. Further, a law will be more permanent than a rule from the regulators. And, the law will likely be stronger.
The credit card companies also spent millions on lobbying and campaign donations to get Congress to pass 2005 bankruptcy amendments that make it harder and more expensive to file for bankruptcy, so aggrieved consumers spend years paying over-priced credit card interest instead and never get a fresh start.
For years the firms also lowered minimum monthly payments and encouraged the use of cards for everyday expenses—through rewards programs—so that many consumers accumulated massive amounts of credit card debt. Until recently, a consumer who owed credit card debt of $5,000 at a common 16 percent APR, who only made the typical 2 percent minimum payment, would take 26 years to pay off the card, even if it was cut up and never used again.
Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area. In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. See the U.S. PIRG reports, "Graduating Into Debt: Credit card marketing on college campuses," and “The Campus Credit Credit trap” and “Characteristics of Fair Campus Credit Cards” at truthaboutcredit.org for more information.
Consumers should either pay balances in full, or make the largest payments they can afford, and always pay early in the cycle to avoid late fees and, worse, having their rates jacked to penalty levels only a loan shark would love—36% APR or more.
For years, credit card companies were the most profitable form of banking, according to the Federal Reserve. But to ratchet up profits even more, they have recently numerous “trick, trap and gotcha” practices.
First, they started tricking consumers by advancing long-standing regular due dates all of a sudden by as much as 5 days or more to trick consumers into paying late. They put due dates on weekends and claimed that bills received after 12 noon or 1pm were late. They started imposing late fees not when bills were 30 days late, but as little as one minute or one day late. The regulators allowed this. Then, even after raising late fees to $39 or more, they claimed that being late also allowed them to jack interest rates by three times or more to 36% APR or even more.
Then, they started claiming that even if your payment history to them was perfect, they could jack your interest rate if your credit score declined (which could happen due to identity theft or numerous innocent reasons) or if you were late to some other creditor. They called this universal default.
Then, as the third strike against consumers, they invoked the extremely unfair “change the rules for any reason, including no reason” clause and started raising interest rates for no reason at all. This outraged Americans who started complaining to the Federal Reserve. Over 60,000 consumers complained. The normally somnolent agency woke up. It agreed with Maloney and Dodd that these and certain other practices were unfair. They proposed and on December 18, 2008 finalized, rules that make the practices illegal. In the past, the Fed had relied solely on disclosure to “protect” consumers. This was a major step.
But the Fed gave the banks until July 2010 to comply with the rules. So, it is important that Congress passes a law that takes effect more quickly. Further, a law will be more permanent than a rule from the regulators. And, the law will likely be stronger.
The credit card companies also spent millions on lobbying and campaign donations to get Congress to pass 2005 bankruptcy amendments that make it harder and more expensive to file for bankruptcy, so aggrieved consumers spend years paying over-priced credit card interest instead and never get a fresh start.
For years the firms also lowered minimum monthly payments and encouraged the use of cards for everyday expenses—through rewards programs—so that many consumers accumulated massive amounts of credit card debt. Until recently, a consumer who owed credit card debt of $5,000 at a common 16 percent APR, who only made the typical 2 percent minimum payment, would take 26 years to pay off the card, even if it was cut up and never used again.
Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area. In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. See the U.S. PIRG reports, "Graduating Into Debt: Credit card marketing on college campuses," and “The Campus Credit Credit trap” and “Characteristics of Fair Campus Credit Cards” at truthaboutcredit.org for more information.
Thursday, 5 March 2009
Thursday, 26 February 2009
Credit Card Companies start offering money to clear off dues!
In a recent report emanating from US, it seems that American Express has started offering its card holders up to 15000 Rupees (300 US Dollars) so that they can clear their outstanding dues on their existing credit cards and stop using them!
Such a disaster was imminent given the way banks have gone and distributed credit cards. In India too leading banks such as ICICI, HDFC, Citibank, Standard Chartered, etc have bent all rules and often given multiple credit cards to people who were not so deserving.
We at CCAI have been warning about the crisis but to no avail.
On top of this the exorbitant interest being charged by these banks along with job losses will lead to more defaults and may lead to the collapse of banks who have tread this path.
Read the story here
Such a disaster was imminent given the way banks have gone and distributed credit cards. In India too leading banks such as ICICI, HDFC, Citibank, Standard Chartered, etc have bent all rules and often given multiple credit cards to people who were not so deserving.
We at CCAI have been warning about the crisis but to no avail.
On top of this the exorbitant interest being charged by these banks along with job losses will lead to more defaults and may lead to the collapse of banks who have tread this path.
Read the story here
Tuesday, 20 January 2009
Congress pushes for credit card relief
New restrictions on lenders will take effect in 2010, but several in Congress are leading the campaign for faster reform.
By Neil deMause
Last Updated: January 19, 2009: 8:46 AM ET
(CNNMoney.com) -- With last week's re-introduction in Congress of a bill to rein in what critics say are abusive credit card practices, the stage is set for a Washington battle that will determine whether entrepreneurs and other credit card users get relief soon from soaring rates and fees.
The Credit Cardholders' Bill of Rights was introduced Thursday by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. The legislation would take a number of steps to restrict credit card issuers, including:
* Banning retroactive rate increases on existing balances for cardholders in good standing. Rates could still be raised if a customer were more than 30 days late with a payment.
* Requiring 45 days' notice of all rate increases on new charges.
* Banning "double-cycle billing," which allows fees to be charged for balances that were already paid off.
* Allowing cardholders to cap how much they can charge to their cards, to avoid overdraft fees.
* Outlawing "universal default" clauses, which automatically hike rates on a card based on unrelated financial activity, such as being late paying another bill.
"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," Maloney said in a press statement. "This bill levels the playing field between card companies and cardholders while fostering fair competition and free market values."
Read the original post here....
By Neil deMause
Last Updated: January 19, 2009: 8:46 AM ET
(CNNMoney.com) -- With last week's re-introduction in Congress of a bill to rein in what critics say are abusive credit card practices, the stage is set for a Washington battle that will determine whether entrepreneurs and other credit card users get relief soon from soaring rates and fees.
The Credit Cardholders' Bill of Rights was introduced Thursday by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. The legislation would take a number of steps to restrict credit card issuers, including:
* Banning retroactive rate increases on existing balances for cardholders in good standing. Rates could still be raised if a customer were more than 30 days late with a payment.
* Requiring 45 days' notice of all rate increases on new charges.
* Banning "double-cycle billing," which allows fees to be charged for balances that were already paid off.
* Allowing cardholders to cap how much they can charge to their cards, to avoid overdraft fees.
* Outlawing "universal default" clauses, which automatically hike rates on a card based on unrelated financial activity, such as being late paying another bill.
"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," Maloney said in a press statement. "This bill levels the playing field between card companies and cardholders while fostering fair competition and free market values."
Read the original post here....
Monday, 12 January 2009
Consumer Groups Applaud Senate Banking Chairman's Credit Card Reform Bill
When will such a thing happen in India?
Wednesday, April 30, 2008
Legislation Would End the Most Abusive & Costly Credit Card Practices
WASHINGTON, D.C. – A coalition of consumer, labor and civil rights groups lauded tough new legislation to prohibit abusive and unfair credit card practices, introduced today by Senate Banking Committee Chairman Chris Dodd. In a letter of support for the legislation, the groups noted that “as the U.S. economy tightens, financially vulnerable families need the protections of the Credit CARD Act more than ever.”
"This legislation stands for the basic principle of fair dealing that every American expects card companies to abide by―a deal should be a deal." said Jeannine Kenney, senior policy analyst with Consumers Union. "The Credit CARD Act requires card companies to finally play by that simple rule."
The Credit Card Accountability, Responsibility and Disclosure Act targets the most abusive practices used by credit card issuers, including:
Wednesday, April 30, 2008
Legislation Would End the Most Abusive & Costly Credit Card Practices
WASHINGTON, D.C. – A coalition of consumer, labor and civil rights groups lauded tough new legislation to prohibit abusive and unfair credit card practices, introduced today by Senate Banking Committee Chairman Chris Dodd. In a letter of support for the legislation, the groups noted that “as the U.S. economy tightens, financially vulnerable families need the protections of the Credit CARD Act more than ever.”
"This legislation stands for the basic principle of fair dealing that every American expects card companies to abide by―a deal should be a deal." said Jeannine Kenney, senior policy analyst with Consumers Union. "The Credit CARD Act requires card companies to finally play by that simple rule."
The Credit Card Accountability, Responsibility and Disclosure Act targets the most abusive practices used by credit card issuers, including:
- Eliminating unjustified interest rate hikes and unfair "any-time/any-reason" contract clauses. During the life of the card, card issuers could not raise rates for any reason other than a change in the index for variable rate cards, the expiration of a teaser rate, or default relating to the card account, ending the practice of raising rates even for card holders in good standing. Rate hikes resulting from default on the card could not be applied to the prior balance.
- Requiring honest, fair penalty rates. Under the Act, if the issuer does impose a penalty rate, it must tell the consumer exactly why, and limit the penalty to six months if the consumer commits no further violations.
- Limiting excessive and growing penalty fees. The Credit CARD Act would require that penalty fees be reasonably related to the costs that credit card issuers incur because of a late payment or over-limit transactions and prohibit card issuers from charging interest on penalty fees.
- Prohibiting late fees for on-time payments. The Act would prohibit late fees upon proof of mailing seven days prior to the due date, and require card issuers to mail cardholders' statements within 21 days of the due date.
- Giving cardholders greater choice. The bill would empower consumers to instruct card issuers not to allow transactions that would trigger over-limit fees, require more advance notice when interest rates are raised, and give consumers the absolute right to cancel cards when rates are hiked.
- Eliminating abusive and hidden finance charges. Credit card issuers would be prohibited from imposing finance charges repaid during the grace period (so-called double-cycle billing) and would be required to allocate payments to the highest rate balance first when consumers hold balances at different interest rates on the same card. Today, card companies apply payments to lower-rate balances first, resulting in unfair and excessive finance charges.
- Limiting aggressive marketing, and irresponsible lending, to young consumers without the ability to repay debt. Credit card issuers would be unable to provide credit cards to consumers under age 21 unless the consumer has a responsible cosigner, can demonstrate ability to repay, or takes a certified financial literacy or financial education course.
Banks’ credit card bluster rings hollow
Archive for Wednesday, May 07, 2008
By David Lazarus
May 07, 2008 in print edition C-1
Ijust love it when the credit card industry threatens to take its toys and go home.
That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry’s more consumer-unfriendly practices.
To increase fairness, the Federal Reserve and two other agencies would, among other things, require card issuers to mail out statements at least 21 days before a payment’s due date and prohibit issuers from applying partial payments only to balances with the lowest interest rates – thus leaving costlier, higher-rate balances intact.
Edward Yingling, president of the American Bankers Assn., said in a statement that the Fed’s proposals represent “an unprecedented regulatory intrusion into marketplace pricing and product offerings.”
He said the measures would “result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.”
In other words, if the industry had to play by the proposed rules, it wouldn’t be able to offer as much plastic to as many people.
Nonsense. No amount of regulation has ever resulted in card issuers scaling back their offerings. More than 5 billion solicitations were mailed to U.S. households last year alone.
Read rest of the news here...
By David Lazarus
May 07, 2008 in print edition C-1
Ijust love it when the credit card industry threatens to take its toys and go home.
That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry’s more consumer-unfriendly practices.
To increase fairness, the Federal Reserve and two other agencies would, among other things, require card issuers to mail out statements at least 21 days before a payment’s due date and prohibit issuers from applying partial payments only to balances with the lowest interest rates – thus leaving costlier, higher-rate balances intact.
Edward Yingling, president of the American Bankers Assn., said in a statement that the Fed’s proposals represent “an unprecedented regulatory intrusion into marketplace pricing and product offerings.”
He said the measures would “result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.”
In other words, if the industry had to play by the proposed rules, it wouldn’t be able to offer as much plastic to as many people.
Nonsense. No amount of regulation has ever resulted in card issuers scaling back their offerings. More than 5 billion solicitations were mailed to U.S. households last year alone.
Read rest of the news here...
Friday, 9 January 2009
Cibil will launch private score for personal loans
Khyati Dharamsi and Joel Rebello.
Friday, January 9, 2009 2:19 IST
After launching a credit score for individuals a bank has lent to, Credit Information Bureau of India (Cibil), the only credit bureau in India, is on its way to launching a credit score for personal loans and other products to help banks reduce their bad loans. Arun Thukral, managing director of Cibil, talks to DNA. Excerpts from an interview:
Cibil has been talking about making credit report available to individuals?
You know that in India, there is no unique identification number. We need a process in place to verify that the person asking for the report is indeed the person whose report it is. Due to the lack of a unique identification number, we use date of birth, mailing address, PAN number, passport number and voter's ID for verification. We might also have to ask for documents initially and cross-check those. But that can't be done in Cibil's office. We need a different process centre and that should be ready in a year. By 2010, individuals will be able to access their own credit reports.
How has the situation changed given that banks are going slow on lending?
Banks are still using our reports to acquire customers. These reports are also used to review the portfolios of customers they already have. That's where the major shift is. Banks have become more selective about the customer profiles they loan money to. The account review or portfolio review tells you how your portfolio is doing. Everybody today is focussing on the regular review of the portfolio to know its health.
Read rest of the story here...
Friday, January 9, 2009 2:19 IST
After launching a credit score for individuals a bank has lent to, Credit Information Bureau of India (Cibil), the only credit bureau in India, is on its way to launching a credit score for personal loans and other products to help banks reduce their bad loans. Arun Thukral, managing director of Cibil, talks to DNA. Excerpts from an interview:
Cibil has been talking about making credit report available to individuals?
You know that in India, there is no unique identification number. We need a process in place to verify that the person asking for the report is indeed the person whose report it is. Due to the lack of a unique identification number, we use date of birth, mailing address, PAN number, passport number and voter's ID for verification. We might also have to ask for documents initially and cross-check those. But that can't be done in Cibil's office. We need a different process centre and that should be ready in a year. By 2010, individuals will be able to access their own credit reports.
How has the situation changed given that banks are going slow on lending?
Banks are still using our reports to acquire customers. These reports are also used to review the portfolios of customers they already have. That's where the major shift is. Banks have become more selective about the customer profiles they loan money to. The account review or portfolio review tells you how your portfolio is doing. Everybody today is focussing on the regular review of the portfolio to know its health.
Read rest of the story here...
Monday, 5 January 2009
Credit Card Companies Willing to Deal Over Debt
Published: January 2, 2009
Hard times are usually good times for debt collectors, who make their money morning and night with the incessant ring of a phone.
But in this recession, perhaps the deepest in decades, the unthinkable is happening: collectors, who usually do the squeezing, are getting squeezed a bit themselves.
After helping to foster the explosive growth of consumer debt in recent years, credit card companies are realizing that some hard-pressed Americans will not be able to pay their bills as the economy deteriorates.
So lenders and their collectors are rushing to round up what money they can before things get worse, even if that means forgiving part of some borrowers’ debts. Increasingly, they are stretching out payments and accepting dimes, if not pennies, on the dollar as payment in full.
“You can’t squeeze blood out of a turnip,” said Don Siler, the chief marketing officer at MRS Associates, a big collection company that works with seven of the 10 largest credit card companies. “The big settlements just aren’t there anymore.”
Lenders are not being charitable. They are simply trying to protect themselves.
Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. Besides, the sooner people get their financial houses in order, the sooner they can start borrowing again.
So even as many banks cut consumers’ credit lines, raise card fees and generally pull back on lending, some lenders are trying to give customers a little wiggle room. Bank of America, for instance, says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008.
Read the Entire Story here...
Friday, 2 January 2009
Banks responsible for card, PIN delivery
Mumbai: In case of misuse of debit cards, banks cannot escape responsibility by saying that they have delivered the card and the personal identification number (PIN) at the address mentioned in the application.
A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorised use of his card. The complainant said that he had asked for a debit card and the bank responded by issuing a card with zero liability.
Though he did not receive the card, he found that Rs 25,000 was debited from his account. On enquiry from the bank, he gathered that the card was delivered to a security staffer in his office building, without checking identification particulars.
The PIN was also delivered to another staffer in his office. This prompted the ‘card holder’ to seek a refund from the bank, a plea that was turned down.
Read rest of the story here....
A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorised use of his card. The complainant said that he had asked for a debit card and the bank responded by issuing a card with zero liability.
Though he did not receive the card, he found that Rs 25,000 was debited from his account. On enquiry from the bank, he gathered that the card was delivered to a security staffer in his office building, without checking identification particulars.
The PIN was also delivered to another staffer in his office. This prompted the ‘card holder’ to seek a refund from the bank, a plea that was turned down.
Read rest of the story here....
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