Wednesday, March 24, 2010

Shuffling the Deck of the CARD Act

In yet another modification to the third (and possibly final) phase of the CARD Act, the FED is again modifying the rules that become effective in August of this year. Well, if you are interested in reading the entire proposed modifications, they are available for download at the White Space Recourse Center. If you would like the nutshell version, please keep reading. Either way, if you are moved to voice your opinion on the changes, just send an e-mail to with the subject line "Docket No. R-1384.'' But hurry, all comments are due on or before April 14.

On March 15, 2010, the FED posted proposed modifications to the provisions of the CARD Act that will become effective in August 2010 and want your input. Our blog has a brief and to the point summary, but if you love reading regulatory documents, we have the relevant section of Federal Register available for download as a PDF. Happy reading.

Penalties would have to be "reasonable." We lawyers love the term reasonable. It can mean just about anything depending on your point of view. Charging a $29 late fee for a $15 payment that is a day late might seem completely reasonable to the likes of Bernie Madoff. It would likely be seen as less reasonable to the person whose payment was delayed a day. Under the new regulation, the punishment would have to fit the crime. In other words, card issuers could not impose penalties that exceed the dollar amount of the infraction. So in the example above, the fee could not exceed $15.00.

In addition, card issuers can only charge a customer one time for one violation (sounds pretty reasonable to me). So if you are late paying your bill, the company couldn't keep charging you a late fee for that one incident. Paying not to pay: Some credit card companies were going to charge you for failing to use their cards. Under the proposed regulation, card issuers could not charge you for inactivity. So if you keep your card in your wallet, you can still keep your money there too.

Increasing Rates: Under the new legislation, card companies could not arbitrarily raise your interest rate. The issuer would have to cite specific reasons for raising your interest rate. Further, if your rate increased after January 1, 2010, the company would have to evaluate your account from time to time. If the reason your rate was increased were no longer an issue the company would have to reduce the rate. Stay tuned. I am sure we have not heard the last of the proposed changes to the CARD Act. After all, August is still five months away. What has been your experience with the CARD Act to date? Let us know by leaving a comment.

John Rothstein, Esq.,
Speaker, Compliance and Communications Strategy Consultant

Stay up-to-date with today's strategic customer communication issues and legal compliance marketing news. Follow my updates on Twitter or visit the White Space Blog for effective marketing tips. Please head over to Compliance Central for all the latest news and compliance tips on Reg Z, The CARD Act and more. I am an attorney, speaker and self-diagnosed communications fanatic. I am also the President of White Space Marketing, Inc., a strategic marketing communications and legal compliance consulting firm. Being a lawyer, public speaker, former commercial printer and communications expert, I love sharing what I have learned with clients, audiences and readers. Please contact me if you would like to have me speak at your next event or if I can help with your business strategy. For more information on White Space or this content, head over to our Blog. Thank you for taking the time to read this article. I hope it was helpful.

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