Congress Closer To Stopping Credit Card Industry's Abusive Practices

The credit card industry took the center stage on Capitol Hill this week, during hearings on the "Credit Cardholders' Bill of Rights," legislation sponsored by Rep. Carolyn Maloney (D-NY).

Credit card abuses are widespread, entrenched and unlikely to end without a ban. Unfair practices that are causing so much pain and financial damage to hard-working families must be stopped such as credit card companies piling on excessive fees; charging interest on debt that is paid on time; charging so-called "trailing interest" that is added between the time a bill is sent out and the date the bill is paid; increasing interest rates on cardholders who pay their credit card bills on time (employing so-called "universal default"); and applying higher rates retroactively to pre-existing credit card debt.

"The playing field between card companies and cardholders has become very one-sided in recent years. Yet, more and more Americans are turning to their credit cards to help pay bills, buy groceries, and make ends meet in this troubled economy," said Maloney, who serves as chairwoman of the Subcommitee on Financial Institutions and Consumer Credit.

"Instead of looking the other way while Americans fall deeper into debt, Congress can and should take swift action to reform major credit card industry abuses and improve consumer protections for cardholders," she said.

State Supreme Court Upholds Payday Lender Loan Shark's $1.4 million Fine

The Arkansas Supreme Court on Thursday upheld a $1.4 million fine levied against the owner of 14 payday lending businesses in Arkansas. The defendant, Dennis Bailey, had appealed the fine on technical grounds.

The decision also affirms the illegal triple-digit interest payday loans made by Fast Cash and Cash Advance have no legal standing and cannot be enforced.

The court's ruling follows state Attorney General Dustin McDaniel's crackdown on payday lenders issuing high-interest loans barred by the state's constitution.

McDaniel last month sent a cease-and-desist letter to 156 payday lenders in Arkansas notifying them that the state constitution caps interest that may be charged at five percent per annum above the Federal Reserve Discount Rate at the time of the contract, or 17 percent currently.

"In addition, I hereby demand that you void any and all current and past-due obligations of your borrowers, and refrain from any collection activities related to these payday loans," he added.

Use A Validation Letter To Make The Collection Agency Prove Their Claim

Q: I received a statement from a collection agency stating that I owe a popular magazine company money for a subscription. When I filled out the post card for the magazine it had stated that I would get 4 free issues and then charged after that if I wished to keep the subscription. Well, it has been many months since I received the magazine and I never sent in the money b/c I decided against the subscription. Now all of a sudden I am getting a letter to collect the money.

My question is, can the magazine send me to collections? I can see if I received all the issues and never paid but that just isn't the case. I have just never heard of such a thing, being sent to collections for a magazine subscription. Is this just a scare tactic to get my money or is this true?

A: Until federal prosecutors start prosecuting companies such as the one you describe for mail fraud, those companies will keep sending fraudulent bills to their accomplice collection agencies to scam people out of money.

In order to keep the collection agency from placing the account on your credit report you need to reply to their demand letter and let them know you dispute the bill. The letter you need to send is called a "validation letter". You can Google the term to come up with examples. I like the one here.

After they are unable to come up with a signed contract or any enforceable legal agreement between you and the magazine company they must close the account and move on to the next victim who is less prepared to protect themselves.

If they do not close the account save all the paperwork and request representation on a FDCPA complaint from a NACA attorney in your area so you can have the collection agency stopped and recover the $1000 statutory damages from them in civil court.

How The Subprime Crisis Hits Everyone

Even if you are not facing foreclosure or do not own a home, you are exposed to the continuing financial earthquakes caused by the mortgage meltdown.

CNN and Fortune Magazine have produced a television show called "Busted - Mortgage Meltdown" that investigates the ways the mortgage crisis impacts everyone. Among other things the show covers how the subprime crises affected:

• home values (down)
• interest rates (up)
  
• inflation (up)
  
• the stock market (down)
  
• our trade imbalance with other countries (up)
  
• the value of the dollar (down)
  
• oil prices (up)
  
• the stability of the stock market and commodities markets (down)
  
• employment (down)
  
• foreclosures (up)
  

The multi-media companion to the show is online.

Cell Phone Companies Using Fake Consumer Group To Protect Fraudulent Bills

If you receive a collection agency demand for an alleged cell phone bill find out when the service supposedly occurred. There is a two year statute of limitations on cell phone bills. It is likely any collection agency letter has language that makes the letter false, and subsequently, a FDCPA violation. If the alleged charges are over two years old contact a consumer attorney right away.

Many of the millions of alleged cell phone bills being pursued beyond the statute of limitations are for disputed services, fraudulent early termination fees, or the result of cell phone companies refusing to cancel accounts even though they are no longer under contract. In several states where legislation is pending that would outlaw the more egregious cell phone billing schemes, a "consumer protection" group has shown up to lobby against reform and tell legislatures that customers are happy with phony phone bills.

The fake consumer group with a website that's so bad it's funny is called MyWireless.org. A fact filled expose about their efforts to deceive and who is paying for MyWireless.org can be found here.

Lenders Canceling Home Equity Lines Of Credit (HELOC) Without Notice

Just because you paid a large fee to have your home equity available to you as a line of credit doesn't mean its still there, even if you've never missed a payment.

Hundreds of thousands of homeowners are having their lines of credit reduced or canceled. Countrywide Financial, for example, says it will suspend credit lines for 122,000 customers regardless of whether their homes have lost value or they have missed payments. Washington Mutual, IndyMac Bank, Chase and Capital One are sending bad news notifications to hundreds of thousands of families as well even in areas where home prices are rising.

The letters don't contain any offers of refunds. If a closing fee of $1000 was paid for a $25,000 second mortgage line of credit and the line is cut in half for no reason, isn't a $500 refund in order?

Some borrows are finding out their account has been frozen when they are notified they have bounced a check. There is an appeals process for some account holders, but if you are in Iraq and your new wife is counting on that line of credit to keep the home in order until your return, how do you appeal in an effective and timely way?

Whoever is to blame for the credit crisis, families who have done nothing but pay property taxes, invest in their communities and pay their bills on time should not be the first to bear the burdon of fixing it.