Frontline: Secret History of the Credit Card
Lowell Bergman
Correspondent
Wednesday, November 24, 2004; 11:00 a.m. ET
The average American family today carries eight credit cards. Credit card debt and personal bankruptcies are now at an all-time high. With no legal limit on the amount of interest or fees that can be charged, credit cards have become the most profitable sector of the American banking industry: more than $30 billion in profits last year alone. Frontline and The New York Times examine how the credit card industry became so pervasive, so lucrative and so politically powerful.
Watch "Secret History of the Credit Card" on Tuesday, Nov. 23, at 9 p.m. ET on PBS (check local listings). Then, join producer/correspondent Lowell Bergman online Wednesday, Nov. 24, at 11 a.m. ET to discuss the report.
Submit your questions and comments before or during the discussion.
Editor's Note: washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
New York, N. Y.:
When did "FICO" scores start having so much effect?
Why are how they are calculated such a secret?
It looks like a big circle of greed by the credit reporting agencies, "FICO" and the banks.
Lowell Bergman: They started using them in the industry in the '80's, but they did not become universal until the 90's. The theorem or algorithm is a proprietary trade secret of Fair Isaac.
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Washington, D.C.:
Hi,
I really enjoyed the program last night, it was very informative. But why did you have Ben Stein on? This seemed pointless to me, except to show everyone that he has lots of credit cards, goes to fancy shops, and pays his cards off every month. I felt this was a waste of valuable time in this important program. Is he a friend of someone on the show?
Lowell Bergman: Ben Stein was interviewed and selected by the producers, Nelli Kheyfets and Dave Rummel, to illustrate the 'non revolver' and present the upside down language of the industry, 'Deadbeat'. In other words you would expect a company to want someone who pays on time. Not the case here.
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Fairfield, Iowa:
Great report but I'm dismayed if Senator Dodds is all we have for legislative reform. He wants more disclosure -- of what, a meaningless contract that can be changed at any time?
We need real reform and the abolishment of the universal default clause, the arbitration clause, and an end to rate jacking and repricing. Let them change the interest on "future" borrowing. Repricing or changing the price on a loan or purchase isn't allowed in any other industry, why in the credit card industry? Does Sears call me and tell me the price went up on the refrigerator I bought a year ago?
The credit card agreement or "contract" is meaningless. Are their any legislators I can contact who are interested in real reform and not just putting lipstick on the gorilla?
Lowell Bergman: Rep. Bernie Sanders of Vermont appears to be deeply involved in the issues you are interested in.
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Lancaster, Pa.:
Why do the credit card companies resort to substantial interest rate increases instead of cutting off credit when they have reason to believe someone is becoming a "riskier" client?
It's as if a bartender resorts to serving doubles to a patron he believes exhibits the traits of an alcoholic.
Lowell Bergman: Most people try to pay off their bills and avoid bankruptcy. There is a stigma associated with it as we discovered when we went out looking for people. And most people continue to pay the high interest and low minimums until they get right themselves economically.
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Grand Rapids, Mich.:
It appears that you went soft on a couple of your interviewees. In particular the OCC representative. She was clearly uncomfortable and unable to withstand further questioning about the OCC's protection of the industry. Also, Kahr was let off the hook easy. How could you be so gentle with a program that advocates for consumer fairness?
Also, it would have been helpful to inform us that, upon request and worthy credit-line history, many fees can be waived. A simple request is all that is needed. I've saved hundreds in fees just by asking.
I will offer a suggestion for a future Frontline. Responsible consumerism and investing. Specically Domini social Investments and Working Assets Long Distance are company's committed to social and environmental justice et. al. Arguably, if more consumers use these company's more company's would behave more responibly. Isn't that the nature of supply and demand.
Thanks and keep up the great work.
Lowell Bergman: Check out the more complete interview transcripts on the web.
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Saskatoon, Canada:
This report is only the tip of the ice berg. Credit cards, banks and finacial institutions have been chipping away at the middle class consumer since the introduction of automated teller services and machines. Rising profits have followed the rise in ATM fees and charges in Canada. I would love to see a report that depicts the rise in bank profits and the introduction of the ATM. I think this topic is worth looking into. Possible title "Convenience At A Price."
Please excuse my spelling.
Thank you for giving us a voice and please keep up the good work!
Lowell Bergman: i think this is a repeat. see above
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Brockton, Mass.:
Are there some credit cards that are more fair than others, or that the customer gets a break?
Lowell Bergman: Look at the Frontline.org website for additional information. Usually your credit union and Arkansas banks, the last state to keep its usury cap, give the best deal.
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Cleveland, Ohio:
I heard on the program, that there might be dire consequences for the credit card industry. If they are so powerful what makes me, John Q. Public feel that this is really gonna happen?
Lowell Bergman: This is a warning that the people we interviewed delivered. Right now it appears that the industry has little to fear when it comes to Congress.
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Baltimore, Md.:
This is perhaps the singular most informative broadcast that I have seen in many years. I will admit, I am not the most diligent when it comes to monitoring my credit balance and my interest rates. I usually make more than my minimum payment and I usually send a check for the same amount every month through my online bill payment service.
This gives me reason to read the fine print and to be more scrutinizing of my bills. Ill be sure to email the pbs.org link and information about the broadcast to all my close friends and family of this broadcast was meant as a wake-up call, I will be first to say I am awake.
What can I do about this on a individual and on a national level?
Also, which are the better credit card companies?
Lowell Bergman: The best credit cards in terms of fees, default, etc. usually are associated with a credit union or a smaller bank that you do business with in terms of a mortgage, etc. Also check out the low rates still offered by Arkansas based banks.
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Bothell, Wash.:
One thing I didn’t see on the show was one very important issue, the pushing by the credit card companies to make bankruptcy on credit cards exempt from the process. This could be a signal as to the bad things are coming to consumers and coming soon. The credit card banks are hard at work making sure that they are well protected from personal bankruptcy. Can you let me know why they should be exempt from personal bankruptcy as they are the agent that helps many people get into bankruptcy?
Lowell Bergman: Congress has disagreed with you in the past. It appears the bill which was re-introduced in this session will survive into the next and be passed. President Bush has said he will sign it. The only reason they should be exempt from personal bankruptcy along with other consumer loans is the industry's insistence that this is fair. Some in the credit card industry believe that the bankruptcy act will try to squeeze money out of people who really do not have it.
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San Francisco, Calif.:
I was curious to know why one of the interviewees, Andrew Khar, requested that he be slightly anonymous. A simple search on the internet might prove why. Mr. Kahr was the founder of Providian. Was he at all involved in that San Francisco legal case against Providian?
Providian Memos Show Sinister Side to COmpany Founder, (AP, May 5, 2002)
Lowell Bergman: As you noted we agreed not to mention his 'clients' and one was Providian at the time of the scandal. However, our research and interviews with the S.F. District Attorney and others showed that Mr. Kahr was no a subject of investigation, nor was he named as a defendant in any related civil actions.
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Kansas City, Mo.:
After working for Citibank, in the collections department, I find most of this information to be false and misleading. Like other letters posted, why weren't there any ways to help get people out of debt on the show? Was this just a look behind the scenes of a subject that everyone already knows about?
Anyone who has ever recieved a credit card recieved a RICA (card agreement), and if I, a mere 18-year-old, can comprehend the "small-print" then I'm sure anyone else could figure it out. Nobody wants to read it. It's the fact that Americans are lazy. It's in plain English and people aren't reading it. That's pure studidity.
And by the way, there is a cap on the APR that can be charged: 29.99 percent.
So I guess my question is (besides the above listed): How many credit cards do you have, Mr. Bergman?
Lowell Bergman: There is no cap unless the company says so in the agreement and indicates it is not subject to change per other clauses. In other words the law does not allow for any cap other than one that exists in the state from which the card is issued.
I have two plus a debit card.
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Raritan, N.J.:
I think your report was excellent. However, it might have been helpful to a least memtion that many of the people who have the most problems with credit cards in terms of fees and high rates could use a pre-paid debit card also known as stored value cards.
It is true that banks are providing credit, but many people are only using these cards as payment cards. A pre-paid debit card provides the same functionality without the hassle.
Lowell Bergman: yes. And more people are using debit cards.
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San Diego, Calif.:
The show last night was interesting. I thought the interview with the OCC spokesperson was especially revealing. If it didn't reveal their attempts at obfuscation, then it could only have revealed ineptitude.
However, I was extremely disappointed that the simple question, "Did you ever think about not spending so much money," was never asked of any of the credit users. Consumers now feel entitled to credit, which is why I have little sympathy for people who complain about the practices of credit issuers but don't even know their own credit scores.
Lowell Bergman: Sympathy is a subjective decision. The question is whether the current marketplace is fair.
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Centreville, Va.:
Mr Bergman: Are there any legislation or regulations pending that will establish higher minimum guidelines for a person to receive a credit card, or to limit the number/amount a person can have at one time? The availability of credit to people who are unable, financially or as a function of maturity, to properly manage credit is making it more costly for those of us who are mature, responsible, and capable of mananging "free" money.
Lowell Bergman: The only legislation I am aware of is the disclosure bills that Senator Dodd has proposed.
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Birmingham, Mich.:
Recently, I discovered that insurance premiums are also determined by credit history and credit evaluation agencies. Similarly, as in the case of credit cards, the insurance companies may raise your premiums due to changes in your credit history. When I questioned an insurance agent about this practice, he informed me, that several years ago, credit reporting agencies solicited their services to insurance companies as a measure to "minimize risk factors." He said that this started in California and is progressing throughout the country. He said that these agencies make millions of dollars off the insurance companies (which is passed off to the consumer of course) by in turn increasing the premium revenues. I suspect it will not be long before other insurance or financial institutions will be doing the same thing -- such as increasing car and lease payments, mortgage interest rates, equity loan interest rates, etc.
My question is simple -- don't any of these practices violate usury laws? And are these practicies bordering on price fixing, racketeering or conspiracy?
Lowell Bergman: State laws do not apply to credit card companies or other consumer loan corporations.
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New York, N.Y.:
Speaking of FICO, since there are so many differing views on this... does it help or hurt your credit score to close credit card accounts you haven't used in years? I've heard they help, to reduce maximum risk of debt, but hurt, because they offset the ratio of existing balance to potential debt.
I think one of the codes on my score (650 -- is that good or bad?) was that I had too many credit cards open, but they're store or bank cards I've not used since 1999. Thanks!
Lowell Bergman: Go to the Fair Issac website for information on how to influence your score.
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Buffalo, N.Y.:
Have either the Clinton or Bush administrations
addressed this issue with a position or agenda, or
is this mainly being investigated in the Congress
by officials like Dodd?
Lowell Bergman: The Kerry campaign did promulgate a position paper in which they endorsed Senator Dodd's legislation. The Bush Administration backs the industry's bankruptcy bill, and like the Clinton Administration supports federal 'preemption' of state regulation of the national banks.
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Atlanta, Ga.:
Will you be doing a report on the credit reporting agencies such as Equifax, Experian, and TransUnion?
Lowell Bergman: I am not doing that, but you may want to write to Frontline directly.
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Minneapolis, Minn.:
Via the FACT act, consumers will soon be able to get a free copy of their credit report once a year. What affect do you think this will have on the way people use credit? Do you expect balance trends to adjust and rate surfing to increase?
Lowell Bergman: Possibly. Consultants say that disclosure actually has minimal effect until people understand a particular items importance. So the APR disclosure seems to be something that causes some educated consumers to switch cards and transfer balances.
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Columbia, Md.:
The OCC part of the interview was indeed an eye opener. In administrative law circles, the present day OCC is the quintessential "captured agency."
Did any of your interviewees, particularly Prof. Warren, discuss this issue and possible methods of fighting this problem?
Thanks.
Lowell Bergman: We did discuss the fact that the OCC is funded by the banks. It also has not made putting its name or contact information on any of the bills or mailings of the banks although Ms. Williams did say that it was someething they 'could do'.
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New York, N.Y.:
How can the free market rectify this problem? My question being, Senator Dodd cannot get his legislation through Congress due to the lobbyists, if the people can organize, what would be an effective boycott in your opinion? Would it be better to target a single company or the entire industry? Will it be better to target a single issue -- such as putting the real amount of time it will take to pay off at the minimum payment or should we shoot for something larger?
Lowell Bergman: Political solutions and tactics are not my forte or something I feel is proper for me to comment on. Sorry.
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Bethesda, Md.:
Mr. Bergman --
Thank you for the informative show. My question relates to the free promotions offered by credit card companies. When I take advantage of one of these promotional offers by signing up for a credit card for free merchindise, then canceling it, does it negitively affect my rating? Thanks.
Lowell Bergman: Again, check with your credit reporting agency and the FICO website.
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New Rochelle, N.Y.:
Has anyone documented how the industry encourages/steers the consumer's use of debit vs. credit cards, and, the fees charged by Financial Institutions for using Debit cards vs. Credit Cards -- to merchants, and consumers?
Lowell Bergman: Please address this request to Robin Stein, one of our reporting group at robinst@nytimes.com.
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Irvine, Calif.:
I wonder why you are not founding a "fair" credit card company. Clearly, you are depriving us all of "fair" treatment, as you would see it. I'm sure that you could find many customers, given the avaricious and despicable nature of those in the business now. Why is it that you are not willing to bring "fairness" to the marketplace and only wish to expose the lack of it?
Lowell Bergman: In my next life I plan to be reborn as a banker. Then I can help you.
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Thomson, Ga.:
Do you think that practices like delaying the payments on purpose to collect fees or changing the payment date be outlawed?
Do you think employers should see credit ratings to hire folks?
Lowell Bergman: Delaying willfully is a violation of the law. In San Francisco the proseuctors, I believe, chose to use the civil law because more money could be returned to customers.
As for looking at credit ratings as a guide for hiring, I think that raises a bigger question about the sharing of financial information by private institutions in this country. No other country in the world allows this which is perceived to be a violation of privacy. It would be worthwhile to have a public debate on this issue.
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Aurora, Ill.:
Why can't I get my FICO score without having to pay for it?
Lowell Bergman: Because they own it even though it is based on your financial behaviour.
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Lynn, Mass.:
I wasn't able to watch the Frontline program, but I did catch Mr. Bergman on WBUR (The Connection).
Specific mention was made to "deadbeats," those paying no annual fee and paying their bills in full each month. Mr Bergman mentioned that the credit card companies are counting on these people being late at least once a year, therefore making at least one late payment fee.
I have noticed that credit card statements seem to be showing up to my house with a lot less time to make the payment. Previously I could wait a few weeks, but now I pretty much have to make the payment within a week, or risk the late fee.
How can we make our voice heard in Congress? I am a responsible credit card holder, and I pay my bills in full each month. I know that the credit card companies need to protect themselves against risk, but this sort of behavior is truly egregious.
Thank you,
Lowell Bergman: The only way I know of making my voice heard is to contact my legislator. Unless, of course, you have access to enough money to make substantial contributions.
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Wheeling W. Va.:
Is there really any difference between the major credit card companies and the cell phone companies with their roaming charges and in and out of area charges? What about car leases with the milage limitations and damage fees? How about your normal phone bill? Can you really understand whether you have the right plan or not?
The only way is to take the time to educate yourself. Our schools certainly make no effort to provide financial literacy.
Do you think it is the government's responsability to protect those who assume no responsability on their own?
Lowell Bergman: Depends. It is usually the government's responsibility to provide basic civics education so people understand through public education that they have a right to vote, etc. Some would argue, and the American Bankers Assoc. agrees, that consumer education is vital. It is an issue worth bringing up with your local school board.
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Baltimore, Md.:
Why do you think that the univeral default provision is "unfair"? If a consumer continues to leverage himself/herself and then defaults on one contract, why shouldn't they be viewed as more risky by other lenders?
Lowell Bergman: They may be more risky looking forward. The 'fairness' question reallyis should they be able to change the terms of a loan that has already been granted?
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Champaign, Ill.:
What role do employment records play in credit reporting and decision making at this point?
My noticed that employer information can be listed on credit reports (though it's missing from own current reports), though I know that credit applications usually ask for a descriptor of one's employment "position."
I could easily imagine credit card companies tracking and using changes in employment status alone as triggers for "universal default" or other ugly decisions.
Lowell Bergman: My understanding of some of the contracts I have seen is that they can change the terms based on their own criteria. This could include employment although I do not know if in fact they do.
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New Orleans, La.:
Are you familiar with the credit counseling industry and Congress's recent investigation of the same?
Really seems like from their report (available at the Web site of the Senate Permanant Subcommittee) that they are trying to clear the decks for the pro-creditor bankruptcy reform bill.
As it stands now, a little know fact is that the bankcard industry created and still controls the credit counseling industry. Coverage of this -- what happens when consumers go off the financial cliff into either credit counseling or bankruptcy -- was the one gap I saw in your program. There's a huge untold story to that as well, and it's even more insidious than the predatory lending practices that move consumers to the cliff's edge.
Lowell Bergman: yes. that's the subject of another Frontline that is yet to be done.
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Irvine, Calif.:
Isn't it true that while you focus on the changes in credit card interest rates that a borrower may trigger via his own behavior, interest rates on variable rate mortgages and home equity loans may be altered by the profligacy of the government (through inflation or additional borrowing to fund deficits)? Aren't you focusing on painting the private sector as evil while ignoring the huge risks created in the public sector?
Lowell Bergman: The public sector is a valid subject for further reporting. However, your variable mortgage is an arrangement you understand when y ou enter into and the way it changes is laid out in your contracts when you receive the loan. As the San Diego case referred to in last Sunday's New York Times states, we do not know why the rate changes from 0% to 19.99% or less or more. It is all determined in private by the lender.
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Canyon Lake, Tex.:
When did it become acceptable for credit card companies to become loan sharks?
Lowell Bergman: Please contact Professor Warren at Harvard Law or Mr. McKinley at Cardweb for an explication of their comments.
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Washington, D.C.:
re: The former Citibank employee.
This poster is implying that even if credit card companies were actually held to it, the 29.99 percent APR limit is somehow fair or reasonable. Can anyone say usury?
The Post Sunday Magazine did a great cover story over a year ago about the credit card industry. It's an entertaining, yet informative, read. Maybe we can get a link? washingtonpost.com:
Acquiring Minds, (Post Magazine, Dec. 14, 2003)
Lowell Bergman: I am not sure. Please contact marrie_campbell@wgbh.org
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Fox Valley, Wis.:
Mr Bergman, thank you for your contributions to journalism over the years, particularly in opposition to politically powerful interests, and for taking the time for this chat. There are many (though, alas, maybe not enough) who appreciate the career-influencing stands you have chosen to take in the past.
One interesting trend that has recently emerged with credit card providers is the offering of "reward cards," cards that offer you "rebates" (money or points redeemable for merchandise/flights). Sometimes these rewards can exceed the profits they could be earning from fees charged to retailers alone, which I believe are generally 3 percent. Some cards out right now offer 5 percent rewards on slected classes of charges, and one even gives 10 percent. I have no doubt that there are solid financial reasons for them to be providing these rewards, but frankly I can't see them -- I suspect these offers more heavily attract the Ben Stein class "deadbeats" of the credit world (a rank I count myself amongst), out to exploit for their maximum personal gain. I was wondering if you had any insight into the reason why they are marketing these cards? Surely the people who carry balances are going to use charge cards regardless, and don't need the incentive of a "reward" to encourage them to use a card.
Lowell Bergman: Mr. Kahr and others say the key is getting the client. Statistically, they believe that person may in fact 'revolve' at some point and use their card. In addition Mr. Kahr says that research - see his fuller interview on line - shows that while people do not believe they will ever be late, they are on average at least once a year.
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Wheeling, W. Va.:
Addressing financial literacy with the local school boards is a drop in the bucket. State boards of education would be the next level but this is a nationwide problem. Don't you think that Senator Dodd and Rep. Sanders would be in a position to push for a nationwide program?
Lowell Bergman: My sense is that all the groups involved including the ABA favor consumer education. It is curious that they cannot get together on this.
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Baltimore, Md.:
I think that you failed to make the point that most contracts stipulate that the consumer, if presented with changed terms of a credit card contract, usually have the option of closing the account and paying off the balance under the existing terms.
Lowell Bergman: True. But this raises additional questions because when this happens you would assume that the consumer has the money to do it, or can find another credit card company to step in an assume their balance. In turn many of those who have their interest rate 'adjusted' have deteriorating credit scores are unlikely to get another company to assume the balance.....
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San Diego, Calif.:
You avoided the question - why didn't you ask if people considered not spending so much money?
As for fairness, when you asked the credit users if they understood the section of the contract describing universal default, they all said they did. But, they also said that was the first they'd heard of it. So, doesn't the fact that there is a clear explanation on the contract of the practice considered most predatory mean that the marketplace is fair? Are you saying it's unfair just because it's in small print?
Lowell Bergman: See the fuller transcripts on the Frontline website. In general it appears that people cannot resist the younger they are. As for the fairness of universal default and the sequence in the broadcast, I think it make the point that people 'think' they understand, but do not necessarily. Admitting a lack of understanding is not something people like to own up to. So just explaining something in print does not by itself mean there is cognition. The industry and its representatives would agree, I believe, that the contract meets the letter of the law, but not necessarily its spirit.
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Jersey City, N.J.:
Hello Lowell,
In your interview with Julie Williams, she mentioned the Providian National Bank case, in which the OCC concluded that Providian had "engaged in a pattern of misconduct in which it mislead and deceived consumers in order to increse profits." Could you please tell me more on this?
Thank you.
Lowell Bergman: You can google the OCC and/or Providian National to get the details. A settlement of the case lists a host of practices ranging from insufficient disclosure and other activities that the bank agreed to no longer participate in.
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Salinas, Calif.:
My understanding is that the average credit card payment is now closer to 3 percent, and yet the report continually quoted a minimum payment percentage of 2 percent. What were your data sources, and how can we be sure there are not other inaccuracies if you missed such a basic point as this?
Lowell Bergman: Our information is the average minimum monthly is 2.38%. It varies depending on who does the survey. Check with Cardweb on line.
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Dallas, Tex.:
Very good program last night -- thanks for this worthwhile project. But what about taking a second step for a follow-up program -- documenting Web sites of credit card companies that mis-state information and credit card service representatives who mislead and mis-state information to their customers?
I've spent a year collecting examples -- there are many -- and some of the examples I have are unbelievable. I would be happy to share them with you. I'm in Texas, and as a result can record telephone conversations without letting the card company know I am recording it. (These companies also always advise that they "...may record a conversation for 'QC purposes...")
This also applies to credit card Web sites that mislead or mis-state information. One very large company consistently displays an amount due for an account on their Web site for online payment each month that is less than the correct amount -- guaranteed to result in a penalty for underpayment. THey haven't corrected this in over six months.
These acts should be illegal -- and in fact I believe that they should be criminal acts.
Lowell Bergman: Please forward your information to us.
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Arlington, Va.:
I was hoping the show would actually go into the "history" of the credit card as described in the program title.
Who invented the credit card? When did they first appear?
Lowell Bergman: There are some standard histories you should consult.
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Bangor, Maine:
Nothing was mentioned on the program about the rising fraud being committed with credit and debit cards worldwide. Was this issue discussed with any of parties being interviewed or was it not considered because banks shoulder the lions share of the burden and monetary losses?
Also, were Visa or Mastercard asked to weigh in on any of the topics discussed?
Lowell Bergman: Visa and Mastercard turned us down. Yes, there is fraud. The industry says, however, that its losses are in the 2 to 4% range. They have been able to keep it under control because of their ability to monitor transactions because of their advanced database systems.
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Arlington, Va.:
Your interview with former governor William Janklow of South Dakota certainly explained why all Citibank credit cards, even now, come from South Dakota. Didn't he seem a little not contrite about his ability to bring big banks to his state simply by changing an historic policy of not allowing high interest to a policy of encouraging them? It seemed he was almost too proud.
Lowell Bergman: Ask him.
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Fox Valley, Wis.:
As someone working in data warehousing profession, I have always marvelled that card grantors and/or credit reporting agencies have not yet taken the relatively trivial step of using prior usage and payment history to classify new applicants and existing cardholders according to their relative profitability, and use that information to determine whether to extend credit. Do you know if there is there some legal reason that they do not do this (i.e. they cannot deny credit because of too good a payment history), or is it simply a case of not being worth it, the returm on investment for them in trying to identify "deadbeats" is not there?
Lowell Bergman: I do not know.
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Newport, Calif.:
The most interesting part of your program was the fact that the bankcard industry totally fuels our easy credit economy. There truly is a kind of "liability bubble" and reform of these predatory practices has become a hot potato. Who wants to be the politician who wrecked the U.S. economy to bring about this much-needed reform?
This is a job for the class action guys... don't you think?
Lowell Bergman: You may be right. They seem to be looking around for new ways to bring a suit.
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Edmond, Okla.:
All of the credit card companies are extending credit lines
to students without jobs on the understanding that we,
the parents will bail them out. Some students leave
college before graduation to pay back the debt. This type
of irresponsible credit is actually encouraged through the
universities by percentage back. What do you know about any
legislation to combat this unethical practice by both the
state universities and the credit card companies?
Lowell Bergman: Senator Dodd has introduced legislation on this issue. You should contact his office.
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Munich, Germany:
What happens to someone who goes backrupt on credit card debt? Are they banned from taking credit until they pay off their debts, and for example, if car insurance premiums are really tied to debt history, what other aspect of life will be infringed upon after bankrupcy?
Lowell Bergman: In the U.S. you start out with a clean slate. However, you cannot file for bankruptcy again for seven years.
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Austin, Tex.:
I've heard that credit card companies are willing to work with card owners who got into trouble with financial problems. Do you think it's fair to not report on this?
Lowell Bergman: Check out the website for Frontline.
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Pittsburgh, Pa.:
Financial institution will always prey on younger, more impulsive, and less educated segments of population. Do you believe that better consumer protection laws will solve the problem? Should the government decide how much money people are allowed to spend?
Lowell Bergman: I think we can all agree that consumers need education before they get into the credit marketplace.
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Washington, D.C.:
Respectfully, did you even attempt to understand credit card risk models? Furthermore, why did not explore how consumers can cancel cards, can choose another card offer, or learn how to manage their personal finances?
Lowell Bergman: Check out the Frontline.org website. We spent alot of time on risk models. Please contact Robin Stein of our reporting group [robinst@nytimes.com] for more details.
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