Jefferson Capital Systems Collection Agency And CompuCredit Hammered By Feds

After CompuCredit failed to present an acceptable settlement offer to the U.S. government, U.S. regulators moved forward and accused CompuCredit Corp and two banks of deceiving hundreds of thousands of credit card customers by withholding important details and blindsiding them with fees. The FTC lawsuit also names collection agency Jefferson Capital Systems, a subsidiary of CompuCredit, as a defendant for violations of the FTC Act and the Fair Debt Collection Practices Act (FDCPA).

The regulators filed a series of civil and administrative-proceeding charges against the companies seeking more than $200 million in restitution and civil penalties.

After a joint investigation by one agency that regulates banks and another that enforces consumer fraud and deception rules, the regulators said the companies engaged in "unfair and deceptive practices" by failing to properly disclose upfront fees and credit limits to consumers with poor credit.

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National Arbitration Forum Exposed By BusinessWeek

What if a judge solicited cases from big corporations by offering them a business-friendly venue in which to pursue consumers who are behind on their bills? What if the judge tried to make this pitch more appealing by teaming up with the corporations' outside lawyers? And what if the same corporations helped pay the judge's salary?

It would, of course, amount to a conflict of interest and cast doubt on the fairness of proceedings before the judge.

Yet that's essentially how one of the country's largest private arbitration firms operates. The National Arbitration Forum (NAF), a for-profit company based in Minneapolis, specializes in resolving claims by banks, credit-card companies, and major retailers that contend consumers owe them money. Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes over bills rather than have the cases go to court. What consumers also don't know is that NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail.

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Lawsuit Seeks Ban On American Express Use Of Manadatory Arbitration

Chicago consumer lawyer Andy Martin today filed suit against the American Express Company accusing the iconic brand of systematically violating a series of federal consumer protection laws. Martin also charged the company with seeking to terrorize ('in terrorem') its customers into submission.

'AmEx's mandatory consumer arbitration program is a massive fraud. Even Amex ignores the provisions of their own documents. My consumer reform lawsuit filed today in DuPage County, Illinois Circuit Court is one of the most important consumer actions filed in recent years. I aim to shut down the credit card industry's efforts to use ‘arbitration' to exclude consumers from access to any remedies in customer-company disputes.

'Arbitration is not a ‘quick, cheap and easy' remedy as it is falsely presented by arbitration organizations. Arbitration can be costly, protracted and very expensive, which is why the consumer credit industry tries to use mandatory arbitration to deprive customers of judicial remedies,' Martin emphasized.

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National Arbitration Forum Exposed By ABC News

Anastasiya Komorova, a recent Russian immigrant, had no idea what was going on when bill collectors started calling her about the $11,000 in credit card debt she owed.

"One time one of them called me an idiot," Komorova's husband Nima Nayebi said.

The problem was that Komorova, who lives in San Francisco, had no idea what the collectors were talking about.

"I have never had a credit card with that company. In fact, when that credit card was issued, I hadn't had any credit cards," she said.

It turned out the credit card company had the wrong Anastasiya, who spelled her name a little differently.

But when the case went to private arbitration — not public court — none of that mattered. Like most consumers, Komarova lost to the credit card company in the private system of resolving disputes.

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Maxed Out On Showtime Tonight

Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders is a book and documentary that show abusive practices in the credit card industry. The book and movie use interviews with creditors and debtors. The film is on tonight at 7pm on Showtime and will also be on Monday May 26 at 10 am, and Thursday May 29 at 11pm. The film is also available through Netflix, Amazon.com and the usual locations.

The purpose for the book and the movie is to raise awareness of how credit and lending issues affect society. The film and book illustrate how banks and other creditors deliberately market to people who are more likely to have problems paying and that the creditors benefit from connections to government, the debt collection industry, and from lawmaker apathy.

The trailer is below.

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.

AAFES Bill Collectors Ripping Off Soldiers And Veterans

Public Citizen, and California consumer lawyers Chandler Visher and Marie Appel, filed suit last year on behalf of Operation Desert Storm, veteran, Julius Briggs, and a class of soldiers and veterans nationwide because millions of dollars have been illegally taken from them by Pentagon bill collectors over military credit cards.

The Army and Air Force Exchange Services (AAFES) took money from military credit card users for expired debt and illegally inflated penalties and fees by deducting the money directly from service members' government benefits.

The government has moved to have the suit dismissed on sovereign immunity grounds, but at the U.S. District Court in San Francisco last week, plaintiffs' attorneys argued the case should go forward.

The AAFES illegally withheld more than $2,300 from the disability payments of lead plaintiff Julius Briggs and also hit him up with inflated interest rates and penalty fees. The withheld money caused Briggs to miss his housing payments and left him temporarily homeless.

The lawsuit seeks an injunction against further illegal bill collecting by AAFES and restitution of all funds illegally taken from soldiers and veterans.

Fee Harvesting Credit Cards Trap Many In Debt

Fee harvesting credit cards are marketed so that consumers will not be able to tell the difference between the high interest rate and high fee cards and regular credit cards.

Fee-harvesting cards represent the the subprime credit card market, credit cards offered to people with low FICO scores or students just starting out with no credit. Sometimes borrowers think they are getting a financial life preserver, but it's really an anchor in disguise.

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Credit Card Companies Switching Due Dates To Hike Rates

Chase and Citibank are routinely changing the due dates on their statements from month to month, often making customers with automatic payments late, thereby saddling them with late fees and higher interest rates per complaints pouring in to consumer watchdog groups.

Consumer advocates say the tactics used by the banks are greedy and not a coincidence.

In the case of one Citibank card user the due date was moved to cause him be late and give Citibank the ability to charge a late fee. The late fee allowed Citibank to raise the interest rate from 3.99% (for the life of the balance) to 24.44%. It sent the monthly bill for Citibank from $211 to $495.

Citibank has not responded to media inquiries regarding their floating due date strategies.

Credit Card Rates Increase As Interest Rates Are Cut

The Federal Reserve's recent cut of interest rates was meant to help the economy and distressed Americans. But some people are finding their credit card rates going up instead.

Dramatic jumps in interest rates have occurred even when a customer is paying on time, like in the case of Carita Marie Gamble.

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Congress Wants To Close Consumer Debt Trap

A report last year from New York-based think tank Demos found that about one-third of cardholders have paid interest rates in excess of 20%, and that borrowers can incur a "cascade" of penalties and end up in a "trap" of high-cost debt.

Legislation introduced by Rep. Carolyn Maloney (D-NY) and Rep. Barney Frank (D-MA) would prohibit some of the most abusive credit card company abuses such as:

* Bait-and-switch interest rate and fee hikes for any or no reason at all during the life of the card;
* Assessing hidden and unfair interest rate charges by charging interest on balances already paid off;
* Unjustifiably maximizing interest charges by requiring consumers to pay off balances with lower interest rates before those with higher rates;
* Charging late fees when consumers mail their payments seven days in advance of the due date; and
* Applying certain unfair interest rate hikes retroactively to balances incurred under the old rate.

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Bank of America Bad For Americans

The Service Employees International Union has a message to Americans about their Bank of America credit card: Keep it in your pants.

After Business Week confirmed Bank of America has sent letters notifying some cardholders it would more than double their rates to as high as 28%, without giving an explanation for the increase they came up with an alternative: Throw it away!

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Legislation Proposed To Outlaw Deceptive Credit Card Fees

Senior Democrats on Capitol Hill want to ban excessive credit card fees. Bank regulators are on the verge of forcing companies to give more notice before raising interest rates. And New York's attorney general, whose investigations transformed the student loan industry, now has his eye on conflicts of interest in the credit card sector.

After years of complaints about abusive practices that trap borrowers in an endless debt cycle, federal and state officials are shining light on the most controversial practices and preparing changes that would make card companies' policies more consumer-friendly.

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