Awakenings

02/15/2009

Senator Carl Levin
269 Russell Office Building
Washington, D.C. 20510

Re: Appeal For Help:
Ongoing Predatory Practices from the Credit Card Industry

I am sending this appeal as a victim, and in direct relation to “Modernizing Consumer Protection in the Financial Regulatory System: Strengthening Credit Card Protections,” “Unfair Credit Card Practices and the Need for a Legislative Remedy,” HR 5244, and ongoing Deceptive and Predatory actions from the credit card industry.  Last year, Steve Autrey testified before the House Financial Institutions and Consumer Credit Subcommittee: “Opening a new credit card and closing an account both hurt your credit score.  That leaves consumers faced with sudden, unexplained interest rate hikes with no good options.”  “The “‘fixed”’ 9.9 percent rate he had on his Capital One credit card for seven years was increased to 15.99 percent in 2007.  In a letter, Capital One stated simply that the business environment had changed.”  (04/2008) Congress Debates New Credit Card Law (redtape.msnbc.com)  As a longtime customer of Capital One, this same situation of abuse recently happened to me.  Now, “The business environment had changed” angle has been updated: “Due to extraordinary changes in the economic environment.”  As a result, they are forcing a change to my credit card account terms – from a 10.9 percent Fixed to a 17.9 percent Variable (knowing that the Prime Rate was slashed so far during our current crisis that it will, in time, rise back up considerably – in increments.

Consequently, would it be logical to assume that within two years my previous 10.9 percent Platinum card might evolve into a 22 percent Platinum card?  Like Steve Autrey, I could refuse the new terms.  However, doing so (as he pointed out) would adversely affect my credit score and history, and also be detrimental to my ability in maintaining a positive credit standing.  Please consider: Combined with an excellent credit score (732 at last check), where the CRAs also note No new accounts, No inquiries, No collections, and all “Pays As Agreed” accounts, my history with Capital One represents a customer of ten and one-half years (Aug. 1998 to present) who would seem to be considered top-tier: Pays As Agreed/Never Late (for years, paid three weeks early on every statement).  A long history of exceeding the “Minimum Payment” ($23.00 due/Sends $165.00).  For years, rarely exceeded a 50% usage of available credit.

Senator Carl Levin, in testimony before the House Financial Services Committee, supported goals of “[prohibiting] credit card issuers from hiking an interest rate and then applying it to a pre-existing card debt” (No Retroactive Interest Rates).  As of 04/17/2009, if I do not close my account, the remaining balance will then be subject to a Retroactive Interest Rate.  Further, aren’t these actions by Capital One (as well as many other credit card companies) the same as Preemptively Bypassing the will and intent of Congress before any new laws, measures, or rules can take effect?

This is an ultimate example of “Unfair and Deceptive” business models, and represents all that is wrong in our Deregulated “economic environment.”  While these types of predatory practices have played an essential role in creating this financial collapse, it also clearly shows that, in spite of Congressional hearings and efforts, the same regressive and oppressive tactics are continuing – as a norm.  Didn’t representatives from the major credit card companies recently promise changes as part of their testimony?  Well, obviously, all that has changed are their presentations and definitions.  In December of 2008, the Richmond Times-Dispatch noted: “The bailout money – in the case of Capital One Financial Corp., $3.56 Billion of taxpayer funds – is meant to encourage financial firms to lend more money.”  Wondering: since Capital One received those billions in taxpayer-funded aid, have they lent more money?  Or, have they gone out and bought other banks, while going after even their best customers – like vultures?

Please also consider the following related statements from
http://consumeraffairs.com/credit_cards/capital_one.htm

Judith of Oakdale, MN (02/12/09)
After years with Capital One and an excellent record, I opened up the mail today to find they are increasing my fixed rate of 7.9% to 17.9%!  Speaking to a supervisor was useless, she just parroted the same lame statement about the economic climate.  As I told them, this is a blatant attempt to gouge customers before a new law forbidding such actions takes effect in July!  I believe this action by Capital One deserves a Class Action Suit.

Brian of Dublin, CA (02/12/09)
Add me to the list of those who have received a notice from Capital One in the past week advising of changes to terms of service.  My APR will go from 6.99% to a ridiculous, usurious 29.4%!  Not a textbook example of how to treat a 10 year Platinum customer with a FICO score of 760+ who has never missed a payment.  I’m going to transfer my balance to another card and stick this card in the drawer indefinitely.  This move absolutely defies logic.

Jennifer of Nuevo, CA (02/12/09)
Capital one decided to raise my rate from 6.9% to 15.9%. They say it is due to unforseen circumstances. I have never missed a payment and I have been a long time customer. This is going to make the economy even worse now. How can they raise rates over 100% on existing balances? This is going to abolish the middle class.  [Emphasis Added 08/28/2013: The rich don’t need credit and the poor can’t get it.  If it was not for the middle class the credit card companies would not be in business.]

Greg of Ladera Ranch, CA (02/11/09)
After being a loyal (NEVER late) customer for over 12 years, out of the blue they are raising my credit card rate from 13.69% to 29% with no explanation given.  I had just recently taken advantage of their low-rate balance transfer offers too!  I now have to scramble to pay this balance off or risk paying these insane 29% rates.  I now have to go to extreme measures to get this card balance paid off immediately which is not easy to do in this tight credit environment.  I will never be a Capital One customer ever again.  This practice could financially destroy consumers.

Once again, this is an appeal – for help.  Common citizens have very little recourse when attacked in such an egregious manner from corporate entities.  It is then, especially, that we look to you, as our Representatives, for reprieve – and Justice.  How many millions of people has Capital One done this to – since receiving $3.56 billion in bailout aid?  As Judith of Oakdale, MN stated, this would seem to be, in the least, a situation begging for Class Action.  Yet, where are the Headlines?   Why isn’t this in the news?  And we, the taxpaying commoners continue crying out, because we need you to stand up – For All of Us.

I look forward to your response in this nationwide matter.
With Utmost Sincerity,

Letter also sent to the following:
Capital One
The Senate Banking Committee
House Financial Services Committee
Federal Trade Commission
The White House
Senator Christopher Dodd
Three Congressmen
One Congresswoman

The Credit Card Debt Crisis

Credit Card Reform Act

The Credit CARD Act

West Virginia Sues Capital One

Capital One Hikes Interest Rates

Capital One Harms Credit Scores

Mena Trott: CitiBank Hates Old People

Senator Menendez’s Letter to the Credit Card Companies

Update: How To Blow Your Credit Limit Without Spending

Capital One: Predatory Practices

*NBC Video Made Invalid by NBC After Three Years*
(*Video Preserved on VHS Tape*)
*Permanent Subcommittee (who referred to NBC) Link Updated*

“Consumers cannot wait til 2010, not in this economy.”  No doubt.  The credit card companies were given a gaping window before any of the new regulations would take effect.  Then, they were politely asked to refrain from gouging their customers in the interim.  Isn’t that like asking the founder of the most successful PayDay Loan company (seen on national commercials promoting his predatory bait as if it derives from the utmost honor and professionalism) to just come forward and admit how he really feels about his prey?  Can We Trust Government to Get Regulation Right

Further Results:

Levin Cosponsors Comprehensive Credit Card Legislation

Restoring Credit Card Rules (And Regulation)

Predatory Practices: Rules And Reactions

Partial Reaction To Efforts

Update (05/02): In relation to the Credit Cardholders’ Bill of Rights, Arianna Huffington notes that “despite the desperate urgency of the situation, all but one of the consumer-friendly provisions of the bill won’t take effect for a year…and the bill doesn’t contain any cap on credit card interest rates.”  So, there is an ongoing national crisis of predatory actions taking place by vulturous companies who are gouging every customer they can before new measures take effect in July of 2010.  The President and Congress intervene – and new measures are passed – which will take effect in May/June of 2010 (leaving out future caps on interest rates – as well as any emergency halts to increases on those rates in the present).  Wow!  You really showed them.  Most importantly, you really showed us.  I guess we can now rest assured that we won’t be victimized further in the interim.   Yeah, and we were all born yesterday.

Update (05/05): Fed Rejects Request To Help Credit Card Holders:
Again, we see the Truth (in their lack of action).  When it all came down to the most revealing point, what we had been hearing and witnessing previously were only Shallow Words and Staged Posturing (including the President himself).

Thank you for your efforts, Senator Sanders.  We are directly in the middle of a national crisis regarding outright fraud and overt predatory actions from the credit card industry, and “The Credit Cardholders’ Bill of Rights” did not even make any measures or rules immediate (beyond a 45-day notice).  Then, the FED rejected requests for capping interest rates or banning Retroactive Interest Rates – which many millions of us are presently being subjected to.  As I wrote before, again, we see the Truth.  When it all came down to the most revealing point, their lack of critical actions, what we had been hearing and witnessing previously resulted as shallow words and staged posturing.  Maybe in the Senate, a few people like you can stand out and make something happen – for the present tense – for all of us?  It’s our last chance (and hope).

Senator Sanders: Unfiltered

Update 05/09: Capital One is currently luring in new customers with various 0% offers.  In addition, they are flooding their presently gouged/trapped customers with 0% check and balance transfer offers.

1) If the “economic environment” is so detrimental, how could they afford all these new 0% customers – even for six or twelve months?

2) Why would Capital One flood their remaining customers (the ones they have attacked as predators) with 0% offers?

Bait and Switch:

In retail sales, a bait and switch is a form of Fraud in which the party putting forth the Fraud lures in customers by advertising a product or service at an unprofitably low price, then reveals to potential customers that the advertised good is not available, but that a substitute is.

1) The new customers are Baited (reeled in), while the old customers’ rate increases “cover the spread” before the (definite) Switch/Change In Terms hits the new customers.

2) The remaining (old) customers are further Baited with a way to survive their present gouging – while being assured (secretly) that they will be hit again, once the time (of the next Switch) is right: “Due to your current debt level, we have decided to change your 0% Fixed agreement to a 23.99% Variable.” And the cycle continues.

Remember ENRON?  It’s Worldwide Fraud.

Update (05/13): It’s Over.  “They Own The Place” (Sen. Durbin).
Senate Rejects Limit On Credit Card Interest Rates

Update (05/19): It’s Still Over.
Nothing Immediate.  No Caps On Interest Rates.
Consumers Are Sitting Ducks Until Next Year.  Yet:

Senator Reid: “We stood up for consumers and stood up to abusive credit card companies.  We said that big banks can no longer take advantage of hardworking Americans.”  Off The Record: “Well, you know, (like in December 08′) we are going to trust them to not go after their customers as predators (on a third wave) before these new measures go into effect.  And, despite giving them a year’s head start, we are certain they will not come up with other ways to bypass everything we have accomplished.”

Step-by-Step:
(1) They Let Us Down (May 21, 2009)
Credit Card Protections Come With…Holes

Doesn’t cap interest rates on credit cards
Doesn’t explicitly cap credit card fees
Doesn’t take effect immediately
Doesn’t limit interchange fees
Doesn’t prevent issuers from finding new fees

(2) The Media Colludes In a Setup (June 15, 2009):
U.S. Credit Card Defaults Rise to Record in May

(3) And Finally, the Results (June 30, 2009):
Citi Raises Card Rates On Millions

(07/06/2009): Are you Shocked, Sen. Reid and Rep. Maloney?
Banks keep hiking rates as credit card law looms:

“Citi has boosted interest rates on some cards to as high as 29.99 percent, according to a Credit Suisse report.  Chase raised rates as high as 23.99 percent, and also increased balance transfer fees to 5 percent of a transaction with a $10 minimum, from 3 percent with a $5 minimum, the report says.  Capital One has kept rates steady for now, but warned consumers they will be increasing over the next year.”

“‘We expect purchase APRs to continue to trend higher ahead of the recently passed Credit Card legislation, slated to go into effect February 2010,’ wrote Credit Suisse analyst Moshe Orenbuch.”

“‘Issuers during this crisis should be using this period to adapt to the new rules about to take effect, not raising rates and changing terms on those who are already meeting their obligations,’ Rep. Carolyn Maloney, D-N.Y., the prime sponsor of the bill.”

Nothing passed in May (beyond a 45-day notice) was immediate.  Caps on interest rate proposals by Sen. Sanders and a few brave others were overridden.  The credit card companies (and newly formed banks) were given another seven months (minimum) head start.  Did you really stand up for us, Senator Reid?  Did you really expect anything different, Rep. Maloney? Did you think there was any (actual) chance these vultures would do what they “should be“ doing before the new measures took effect?  To them, this is what they Should Be doing – just like they were – since December of 2008 (with a one and a half year’s notice).

11/19: Credit Card Rate Freeze Killed

Debtors Revolt

Time For a Credit Union Movement

Talking Points: New York Times

In Jail for Being in Debt

Owe Money?  You Might End Up in Jail

Update (02-23-2013): More than three years since Predatory giants (like Capital One) caused uproars from millions, their practices remain the same.  If my local credit union assesses a credit score of 796 combined with a perfect credit history as worthy of a new credit card account with more than double the credit limit and half the interest rate of a card I have maintained (in the most exemplary fashion) with Capital One for almost fifteen years, why would Capital One refuse to either lower the interest rate or raise my credit limit (on the same card/account they targeted along with almost everyone in the nation during their “Due to the Economic Environment” scam of 2008 and 2009)?  Because a certain “Environment” continues – without repercussions (they can’t just laugh at).

Congress Shocked by Credit Card Predators? 
Sugar-Coated Status Quos