(Washington, DC) - U.S. Rep. Gary Ackerman (D-Queens/L.I.) today made the following statement during a hearing on credit card practices held by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Ackerman, a senior member of the Financial Services Committee, spoke about his legislation that would prohibit credit card companies from charging a fee to pay bills online or by phone (the Credit Card Payment Fee Act – H.R. 873). The hearing was entitled “Credit Card Practices: Current Consumer and Regulatory Issues.”

“Thank you, Madame Chairwoman, for scheduling this hearing.

Madame Chairwoman, over the past ten years, credit card companies have steadily increased financial burdens on American consumers – which itself would be bad enough. But, as credit card agreements become increasingly more complex to master, with teaser interest rates, universal default, double-cycle billing, transfer fees, membership fees, finance fees, over limit fees, cash advance fees, stop payment order fees – the list goes on and on – credit card companies have absolutely failed to disclose – in an honest, straightforward manner – the real terms of their products to American consumers.

In a particularly gluttonous practice, some credit card companies, having induced customers to pay their bills online, are now charging fees to their customers simply to pay their bills online or by phone – not just for an “express payment” so it posts same day, but a fee simply to pay their bill. It’s like having to pay a fee in order to be able to pay for your groceries at the check-out counter. Since both online and phone payment methods would provide the customer the ability to quickly make their payments and check to ensure the payment will post before the due date, a fee to use these payment options is aimed at encouraging credit card customers to pay their bills by mail. Naturally, some customers – maybe they’re on vacation, maybe their statement got lost in the mail – will mail their payments too late and have to pay a late fee. One late payment, of course, could result in your being tossed into the not-so-tender-trap of then paying a significantly increased interest rate.

In what is perhaps one of the most insidious schemea of all, some credit card companies are now sending their monthly statements out later in the month, giving their customers much less time to mail their payments without risking a late fee, causing them to pay online or by phone, only to discover that they are being charged to pay by phone or online. It’s heads I win, tails you lose. Our customer who is on vacation – don’t worry, he didn’t leave home without his American Express card – stands no chance of paying his credit card bill without being assessed a late fee or a fee to pay online or by phone. It would be the equivalent of the federal government mandating that taxes be paid by April 15, but not allowing W-2 statements to be mailed out until April 6. You wouldn’t receive your W-2 in the mail until April 10. Then, when you show up to the post office before April 15, you’re told that there’s a $15 charge to pay your taxes by mail.

Because of this outrageous and predatory tactic, I have introduced, along with the Chair of this subcommittee, legislation that would prohibit credit card companies from charging a fee to their customers explicitly for paying their bills online or by phone. H.R. 873, the Credit Card Payment Fee Act, would not deal with express payments or any other of the various schemes that credit card companies have undertaken to swindle the American public, but would simply protect credit card customers from being entrapped in the vice of their Visa.

There are, of course, many other practices within the credit card industry that require reform. I echo the conclusion of a September 2006 Government Accountability Office report that called for revised disclosures more clearly emphasizing the terms of a credit card agreement that affect cardholder costs, especially those actions that will cause a default or result in penalty rates.

I look forward to hearing from our witnesses this morning, and hope that they will discuss possible solutions to many of the problems in the credit card industry.  I yield back the balance of my time.”

###

Return to Gary's Homepage