Seniors Continue to Get Slamed With High Interest Credit Card Debt - And It's Getting Worse

The fastest growing group of credit card debts are seniors struggling with the cost of health care. Social Security is not the answer and the coming population bubble of Boomers is going to seriously impact the numbers as well. Here is an article that pretty well describes what millions of seniors are now being faced with on a regular basis.


More seniors struggle with debt

CREDIT CARDS: Social Security checks often can't cover rising health care and housing costs.

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11:30 PM PDT on Monday, June 4, 2007

By DAVID OLSON
The Press-Enterprise

June Black's financial problems began when she put charges for a doctor visit, medical tests and prescription drugs on her credit card but couldn't pay the full balance of about $300.

A series of late fees and finance charges followed. Three years later, Black, 71, is more than $6,000 in debt. The Riverside woman sold her car, moved to a smaller, cheaper apartment and writes a $127 check each month to pay off a credit card that she long ago cut up. She said she feels an obligation to pay something.

Yet with the 32.24 percent interest rate that her credit-card company charges, Black has little hope of ever becoming solvent.

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Ramon Mena Owens / The Press-Enterprise

Joe and Annie Vasquez, of San Bernardino, say they constantly worry about falling into debt. "They say being a senior is the golden years," Annie Vasquez said. "I'd do anything to be 50. Being old is for the birds."

"It just keeps spiraling," Black said of her debt. "I figure I'm going to die before this gets taken care of."

Faced with large increases in health care and housing costs, and often surviving on a Social Security check that is, on average, below the minimum wage, an increasing number of seniors are falling into debt.

A study to be released later this month by the New York-based research and advocacy group Demos shows that credit-card debt for people over 65 grew more quickly between 1989 and 2004 than for any other age group. Other recent studies also have found big increases in seniors' debt and bankruptcy rates.

"I think it's going to get worse," said Tamara Draut, co-author of the Demos report. "We're seeing more economic insecurity in people's working lives, and that will only spill over into retirement life."

A September 2006 study by the Washington, D.C.-based Employee Benefit Research Institute found that the median amount of debt -- including housing debt -- for a family headed by someone 55 or older rose 121 percent between 1992 and 2004, to $32,000. The increases were greatest among people 75 and older, and among the poor. The institute is a nonpartisan research and education group focusing on employee benefits and economic security.

An institute report released last month found that Social Security comprised 91 percent of the income for the poorest 25 percent of U.S. seniors. The same report found that the median inflation-adjusted annual income for those 65 and older fell 3 percent between 1999 and 2005, to $15,422.

Studies by the institute and other groups have found that seniors are still less likely than younger people to face debt. But the gap is narrowing.

In 1994, people 55 and older comprised 9.6 percent of bankruptcy filers, according to a report released last month by the Administrative Office of the U.S. Courts. By 2002, their share had risen to 14 percent. That's an increase of 46 percent, even though older Americans' proportion of the population only rose 3 percent during that time.

Bankruptcies on Rise

Harvard University's Consumer Bankruptcy Project found in 2001 that the number of bankruptcies among seniors in the previous decade soared 244 percent, by far the biggest rise among any age group. The project is planning to release updated statistics later this year.

Deborah Thorne, director of the project, expects the trend to continue. Many older Americans are not healthy enough to work and have no way of handling increasing expenses, she said. Far fewer retirees today receive pensions than in the past.

"They're locked into a corner," Thorne said. "They don't really have options. My guess is you'll see millions and millions of people retiring into debt."

With a $775 monthly Social Security check as her only income and a $735 monthly rent payment for her San Bernardino apartment, Sandra Earle long ago gave up trying to pay off her credit-card debt, which she estimates is now more than $20,000.

"We dream about having a perfect place with a porch to sit on," Earle, 65, said of old age. "But you can't have that no more. I know I can't have that, and a lot of people are like that. They can't even eat."

Waiting List for Section 8

Earle gets almost all her food from church programs, Meals on Wheels and subsidized meals at the city's Fifth Street Senior Center. She earns a few extra dollars by running errands for neighbors. Earle said she has been on a waiting list for more than four years for Section 8, a federal subsidized-housing program.

Earle never had a credit card until about five years ago. She said she always sent in at least the minimum payment for her five cards, not realizing that just sending in the minimum payment -- instead of the full balance -- could lead to high interest charges.

Many seniors receive credit-card solicitations in the mail and don't realize how easy it is to quickly fall behind on payments, said Sally Hurme, a senior project manager in the financial security department of AARP, the 37-million-member group for people 50 and older.

"The quicksand of the finer details of the credit-card contract can gobble alive people who are not savvy about credit cards," Hurme said. "I'm a lawyer, and I'd be hard-pressed to explain all of the fine print."

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Kym Adams, a Hemet document preparer who has helped seniors file for bankruptcy, said some seniors fall into debt after cashing credit-card company checks that often carry hefty interest rates and fees.

"They tell me they received a blank check and it was so tempting," Adams said. "They said they realized when they got the check they wouldn't be able to pay it, but they say, 'My car broke down and I needed to pay for it. All I've got is $600 a month in Social Security.' I can hear the cry in their hearts for more money."

Credit cards are not meant to be used for long-term loans, said Tracey Mills, spokeswoman for the American Bankers Association, a trade group that represents credit-card companies. Interest charges and fees are necessary to reduce card companies' risk of losing money from nonpayment of bills, she said. The group encourages consumers to compare rates.

Many seniors grew up with a pay-as-you-go ethos and are shocked and embarrassed to find themselves in debt, said Marilyn Lynch, an adviser at the Janet Goeske Senior Center in Riverside. She said at least a half-dozen seniors at the center have sat down to talk with her about their debt problems over the past three years. She suspects the real number of indebted center patrons is much higher, because many seniors are ashamed to acknowledge they're in debt.

Annie Vasquez, 79, recalled how her parents were devastated by debt during the Great Depression. The San Bernardino woman has always heeded their warning to do everything possible to avoid the same fate.

Yet she and her husband Joe, 82, have endless health expenses. Vasquez said she constantly worries that one unexpected medical emergency could push them into the red.

"They say being a senior is the golden years," Vasquez said. "I'd do anything to be 50. Being old is for the birds."

Delayed Retirement

Seniors' financial crunch has forced many to delay their retirement plans and work well into old age, Hurme said. The longtime trend of people retiring earlier and earlier has reversed in the past few years, she said. That's partly because an increasing number of older Americans are choosing to work longer. But many have no choice, she said.

And homes don't offer the same type of financial security that they used to, Hurme said. Seniors who owned homes typically entered retirement with no mortgage payments, she said. Today, many people who are at or near retirement age use their home equity to take out loans. And mortgage payments are much higher.

Many people underestimate how much money they need to save for retirement, said Richard Pittman, housing services coordinator for By Design Financial Solutions, a Commerce-based nonprofit credit-counseling service with an office in San Bernardino. Others don't earn enough to save. Expenses that are reasonable during working years become onerous after retirement, he said.

"If you're relying on a Social Security check, God help you if you have to pay rent," Pittman said.

Some seniors increasingly rely on high-interest payday loans and are unable to pay them back, he said.

Targets of Scams

Elisabeth Sackmann, supervisor for the Banning Senior Center, said she regularly talks with seniors who are targets of scams. Many seniors are especially vulnerable to fraud -- such as giving out a bank-account number to receive money won in a "contest" -- because they are desperately lonely, she said.

"They have nobody to talk to except maybe their pet, and someone is interested in them and interested in what they have to say," she said.

Some seniors fall into debt because they had depended on their spouses to manage money and have a hard time dealing with bills after the spouses die, said Judith Vails, executive director of the Goeske center.

Sara Jamison said she inherited about $5,000 in credit-card debt that her husband, Richard, accumulated before he died last year at age 67. Her name was on the accounts. The Grand Terrace woman also owes more than $3,000 for hospital expenses for visits in March and in 2005.

Jamison is 54, but a back problem prevents her from getting a full-time job. She said she applied for Social Security disability and widow benefits but was turned down. She is appealing the decision.

Jamison said her daughter pays her rent for now, but she won't be able to do so much longer. She said she fears she'll spend her old age on the streets.

"It makes me cry," Jamison said. "I get depressed. Sometimes I want to die. What do I do in this situation? I don't have many options."

Reach David Olson at 951-368-9462 or dolson@PE.com

Finally! Legislation That Makes Sense and Holds Credit Card Companies Accountable

This is the finest and most comprehensive piece of legislation I have seen to curb the abuses of the credit card industry. If this regulation would pass, we would see an unbelieveable change in the industry with consumers reaping the benefits. These two Senators need to hear from us and get our support. Fabulous work!

News

Monday, May 21, 2007

McCaskill, Levin introduce credit card legislation

Published: Saturday, May 19, 2007 11:29 AM CDT
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Sen. Carl Levin, D-Mich., and Sen. Claire McCaskill, D-Mo., today introduced legislation to stop some of the most egregious credit card practices that unfairly deepen or prolong credit card debt held by consumers. The Stop Unfair Practices in Credit Cards Act follows an investigation and hearing by the Permanent Subcommittee on Investigations, which Levin chairs and on which McCaskill serves.

“Credit card issuers too often sock consumers with sky-high interest rates and excessive fees, making it harder and harder for families to climb out of debt,” Levin said. “The goal of this legislation is to put an end to unfair and abusive credit card practices that outrage so many American families. I'm afraid these practices have become too entrenched and too profitable to the credit card companies for the companies to change them on their own. Congress needs to enact pro-consumer legislation to put an end to these unfair practices.”

“Credit card companies must be stopped from preying on the most vulnerable Americans with unfair and confusing practices. We have to fight for those who have not hired dozens of lobbyists to make sure that American consumers are not getting ripped off and are fully informed of how these companies are manipulating their financial security,” McCaskill said.

In October 2006, Levin released a Government Accountability Office (GAO) report analyzing credit card fees, interest rates, and disclosure practices by major credit card issuers. Following the release of the GAO report, Levin directed the Subcommittee to investigate unfair credit card practices that mire so many Americans in debt. In March, Levin chaired a subcommittee hearing and called as witnesses the chief executive officers of the three largest credit card issuers in the country - Bank of America, JP Morgan Chase Bank and Citigroup - and an Ohio consumer whose personal credit card experiences exemplified many of the outrageous practices.

Levin added: “Credit card companies are so profitable that they can afford to give up unfair practices like charging interest on debt that is paid on time, charging consumers a fee to pay their bills, doubling or tripling interest rates to penalize late payments or over-the-limit charges, imposing repeated over-the-limit fees for a single over-the-limit purchase; and applying consumers' payments to the parts of their accounts with the lowest interest rates first. It's past time for Congress to protect consumers from such unfair and abusive credit card practices.”

The Stop Unfair Practices in Credit Cards Act has been endorsed by Consumer Action, Consumer Federation of America, Consumers Union, National Consumer Law Center, U.S. PIRG, and the Center for Responsible Lending.

A summary of key provisions in the Stop Unfair Practices in Credit Cards Act follows.
Interest Rates

No Interest on Debt Paid on Time. Prohibit interest charges on any portion of a credit card debt which the card holder paid on time during a grace period.

No Trailing Interest. Prohibit added interest charges on credit card debt which the card holder paid on time and in full.

Limits on Penalty Interest. Prohibit interest rate hikes on a credit card account unless the card holder agrees to them at the time, and in any event, limit penalty interest rate hikes to no more than a 7 percent increase.

Apply Interest Rate Increases Only to Future Debt. Require increased interest rates to apply only to future credit card debt, and not to debt incurred prior to the increase.

Credit Card Fees

No Interest on Fees. Prohibit the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees.

Restrictions on Over-Limit Fees. Prohibit the charging of repeated over-limit fees for a single instance of exceeding a credit card limit, and allow such fees to be charged only when a card holder's action, rather than a penalty, causes the limit to be exceeded.

No Pay-to-Pay Fees. Prohibit charging a fee to allow a credit card holder to make a payment on a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise.

Reasonable Currency Exchange Fees. Require currency exchange fees to reasonably reflect the credit card issuer's actual costs.

Other Protections

Prompt and Fair Crediting of Card Holder Payments. Require consumer payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Prohibit late fees if the card issuer's action caused the delay in crediting a payment.

Fixed Credit Limits. Require that card issuers must offer consumers the option of having a fixed credit limit that cannot be exceeded.

Abuse of "Piggy Backing"

This article is about the recent abuse of what is termed as "Piggy Backing" and is a legitimate means for a person to add credit history and improve their scores. However, as with everything it seems these days, someone found a way to abuse it. Rather than used sparingly or appropriately such as with a parent/child relationship or close friend, some Internet marketers are exploiting it to the maximum by selling credit histories to anyone willing to pay the price in order to get a decent mortgage rate.

Let's be clear. I hate this abuse and the regulation it could cause. It is also important to point out, that "Piggy Backing" is nothing more than adding your child or someone you know to your credit card account as an authorized user and all the positive payment history you have built up over the years shows up on the authorized user's credit history as well.

It is a loop hole that the credit card issuers didn't think through evidently and it has helped many, many children start out with good credit history. When it is used as fraud with the intent to deceive and misrepresent, then I am against it. I'm sorry this has happened, i.e. the abuse, but "Piggy Backing" should not be outlawed. It is a tool I recommend, I just don't recommend using it to commit fraud. A word to the wise, avoid this like the plague.

(04-08) 04:00 PDT Washington -- When your credit scores don't qualify you for the mortgage you want, where do you turn? That's an especially timely question now, as banks and mortgage companies tighten underwriting standards for applicants with less than perfect credit. But federal and state authorities fear that some borrowers are turning to a fast-growing business on the Internet -- companies that claim to boost credit scores by transplanting the credit DNA of people with excellent payment histories into the credit files of people with subpar histories -- ostensibly without breaking any law. The companies claim to raise FICO credit scores by 50 to 250 points or more by adding low-scoring borrowers as "authorized users" onto the credit card accounts of people with FICO scores well in excess of 700. The positive payment information from such cardholders then flows into the files of the persons with subpar credit. Federal law permits authorized users to be added to credit card accounts. Typically the users are relatives or friends of the primary cardholder. For example, a parent might add a son or daughter to a Visa card in order to provide access to credit for the child or for use in emergencies. Federal law, however, does not limit the number or prescribe the type of authorized users permitted on any single account. Nor does it prohibit the rental or sale of authorized user designations. Exploiting that loophole, numerous companies have popped up on the Internet offering to buy and rent out the credit card "trade lines" or accounts of credit card holders with high limits combined with perfect payment histories. Big bucks -- and a strong potential for fraud on mortgage applications -- are involved. Some Web site promoters say they can add 80 to 120 authorized users onto a high-quality credit card account before banks or lenders get suspicious. Each account can rent for as much as $1,500 to $2,000 for a 180-day usage. The primary credit card holder receives a cut of the rental fee, often hundreds of dollars for each authorized user added to the account. The person seeking a higher credit score does not obtain actual access to the credit card. But within 30 to 90 days of being added to the account, the national credit bureaus incorporate the primary cardholder's ongoing account information into the files of the authorized user. The score-raising attributes of the primary cardholder's stellar payment record then flow through to the new user. One company based in Tampa recently solicited mortgage brokers promising FICO score boosts of 150 to 205 points for applicants "in as little as 30 days" for the "discounted" price of $750 per trade line. That widely distributed pitch prompted one state financial regulator to issue a "fraud alert" warning that "consumers, brokers and lenders that complete, submit or participate in the completion and submission of an application for credit that contains misrepresentations or false information are subject to administrative actions and potential criminal penalties by the state." The Nevada Mortgage Lending Division termed the inflating of FICO scores through additions of authorized user accounts "deceptive" because it makes credit-impaired applicants appear to be more creditworthy than they actually are. Mortgage lenders might grant them lower interest rates and lower fees than they otherwise could obtain. Some Web sites advertise and price high-quality credit card trade lines on the basis of their credit limits and time on the account. A site called AddaTradeline.com recently offered a card history with a $25,000 credit limit and 2 3/4 years of perfect payments for a fee of $1,025. Adam Wheeler, who identified himself as the owner of AddaTradeline.com, based in Orange County, said his business "is legal, although some people might say it's unethical." He insisted that his firm does not approve of efforts by clients to mislead lenders. "If they are going to lie to lenders," he said, "that is not good." Asked for comment on the rental of trade lines to artificially inflate mortgage applicants' FICO scores, Steven Baker, Midwest director for the Federal Trade Commission, would say only: "We are aware of it. We are concerned about it, and we are looking into it." Donald Girard, spokesman for Experian, one of the three national credit repositories, said, "These are nothing more than new credit repair scams." However, he said, Experian "does support authorized user relationships such as ... parents helping a son or daughter establish credit with their first credit card." Fair Isaac Corp., developer of the FICO score, said that the "inappropriate use" of trade lines is "an industrywide issue" and that the company is in discussions with the FTC. E-mail Kenneth Harney at kenharney@earthlink.net. This article appeared on page K - 4 of the San Francisco Chronicle

If Sub Prime Loans Were The Problem, What Is The Solution?

We have created another web site to address credit re-establishment, http://www.freshstartcreditscores.com. To me, most of the sub prime loans are not necessary if the people caught in them can take some steps to improve their credit scores before it is too late.

Believe it or not, there are ways to add points to credit scores and refinance before it is too late. Secured loans are the most favored instrument to me, because of the low cost as opposed to the secured credit card route which is often incredibly expensive.

If Sub-Prime Loans Were the Problem, What is the Solution?

By

Pat Hicks

Once upon a time long, long ago I sat across the desk from a banker and listened to the clock tick as he scanned my loan application for my first house. As the vest buttons of his three piece suit strained, he looked over his reading glasses at me and with the experience of having looked at hundreds, maybe more, of these applications he said,

“You didn’t borrow any of this down payment, did you? We’ll be able to find out if you didn’t save it yourself?”

“Oh, no sir. All twenty percent of the down payment is mine.”

“Well, you’re pushing it with your monthly payment being 27% of your gross income. We prefer the payment to be no more than 25% of your net income. We might be able to do something but I can’t guarantee it.”

I ended up not buying the house simply because I couldn’t see myself, as a twenty six year old, saddled with a $500 a month PITI mortgage for a 2,400 square foot home. However, at no point did he want to know my credit score.

Fast forward to today and we are quick to blame the sub-prime crises we face now on the plethora of people that can’t discipline themselves financially or the predatory lenders that have created mortgage banking products that are, at best, questionable in nature.

But, how did this situation develop in the first place?

First, look back to the Supreme Court decision in 1978 that allowed usury credit card interest rates to be exported from North Dakota. Soon, other states joined the bandwagon and, adjusted for inflation, from 1968 to 2000 credit card debt increased by 6,000 %. That’s right, I needed a comma. One more time; a six thousand per cent increase. Now, 20% of all twelve year olds in this country carry a credit card.

Is it the personal responsibility of the consumer to cease and desist using credit cards and going further into debt? Sure. Absolutely. Is there corporate responsibility for banks to scale back on the two billion mail solicitations a year for credit cards to American consumers and ask themselves is it morally right to require credit card agreements to have thirty pages of terms which allow more and more creative ways to trap the customer into deeper debt? Agreements which Harvard Law School professors that teach contract law can’t read? I think the answer has to be “yes” in both cases.

But, what does this have to do with sub-prime mortgage loans? Well, in a word, everything.

Sub-prime loans just like the out of control credit card industry are the direct result of banking de-regulation, and after two decades of this de-regulation, home owners of today are three and one half times more likely to lose their homes to foreclosure than their counterparts a generation ago. With home loan payments that are 40% to 50% of a family’s gross monthly income, with more available credit, more complex credit and more expensive credit we suddenly find ourselves in a mess of foreclosures and bankruptcies. And, we are now surprised?

Sub-prime loans are not the problem, they are a symptom of the problem and the problem is that, “Just a generation ago, the average family simply couldn't get into the kind of financial hole that has become so familiar today. The reason was straightforward: A middle-class family couldn't borrow very much money. High-limit, all-purpose credit cards did not exist for those with average means. There were no mortgages available for 125 percent of the home's value and no offers in the daily mail for second and third home equity loans. There were no "payday lenders," no "live checks," no "instant money," and certainly no offers to "consolidate" all that debt by moving it from one credit card to another.”, because it would have been against the law to do so, according to Elizabeth Warren of Harvard Law School who recently testified to Congressional hearings.

So, what is, or, maybe the better question: is there a solution? To me there is, and it is two fold.

First, some banking regulation is absolutely necessary. It is no accident that Congress is investigating credit cards which charge what would have been usury interest rates prior to de-regulation with incomprehensible terms, trick billing cycles and “traps” to squeeze ever more profit and fees out of the consumer. It seems $29 Billion in revenues were not enough for the banking industry in 2005, so interest and penalty fee revenues were increased using these predatory tactics to attain $79 Billion in revenues. There is no reason to believe that revenues went down since these numbers were reported.

So, when this is combined with predatory fees, interest rates and deceptive practices used by credit cards companies, the consumer is getting steered, squeezed, mislead and their economic viability drained. Two decades of deregulation has taught us that market forces left to themselves, simply are incapable of finding within their structure the morality to do what is right. With more and more regularity, when describing the dire circumstances of debtors, we are discussing and addressing the person next door in suburbia. It is no longer a low income problem.

Without a change in the laws, it is my opinion that combined consumer and lender based action is needed for short term and a long term strategy to positively impact those most affected by all predatory lending.

At first blush the program we have created would seem counter intuitive. However, if an abundance of credit is here at least for the foreseeable future and possibly forever, and if the laws in place are soon to be changed, then credit re-establishment to improve credit scores in particular seems to me to be the means to move “higher risk” borrowers away from predatory sub-prime loans of all kinds to main stream or “A” category loans with much lower interest rates.

Such action is based on a moral understanding that economics is the core of “Family Values”, that divorce due to financial strains, missed child support payments due to bankruptcy and families without economic independence destroys the vitality of the family and the ability of families to care for their children.

Such action is suggested with the knowledge that debt free lifestyle is preferable, admirable and some suggest very attainable. While I certainly don’t discredit or disagree with this goal, the facts are, that most workers will not attempt to achieve a debt free life. So, the reality for most consumers is that the best option available at this time is to secure the lowest possible cost of credit available to them. And do so, as soon as possible while targeting the overall goal of debt reduction.

The very first thing asked of a borrower now, is their credit score number. With credit scores taking over as the major determining factor for establishing the interest rate which a consumer must pay, and with cash purchases of automobiles, appliances and other large ticket items being out of the reach of most middle to lower middle income buyers, it is imperative to improve their credit or they will continue to be enslaved in usury interest rates for years to come.

If some of these usury rate loans were at normal interest rates, even with job layoff or any other life emergency, the consumer has a much better chance of not defaulting on a mortgage payment. And, with credit scores closer to the national average of 679 which qualify for better loans, the cost of credit is lowered resulting in better debt to income ratios.

To accomplish credit re-establishment, we have assembled a program designed to address what we consider to be the three major problematic areas of someone being steered into sub-prime rates.

The first area is creating consistent payment history, establishing new credit and producing permanent positive marks with “paid in full” status. To do so, the lending product or vehicle of choice is secured loans. Typically, these kinds of loans fall into another type of predatory lending as they want significant fees up front and/or deposits that are never returned in exchange for providing secured credit card accounts. Banks, if they have a secured loan program in place, are incredibly difficult to find and virtually all will not work with potential customers who do not posses significant amounts of capital with which to secure the loans.

However, with the backing of a consumer friendly lender, which we have found, that is willing to work with customers to raise their scores, the chances of success suddenly skyrocket. Using inexpensive secured loans rather than expensive secured credit cards, the program brilliantly adds points to credit scores. Payment history is consistent, timely and complete. New credit has been created responsibly as is the type of credit. At the end of the secured loan term, the participant has improved credit scores by completing a six month repayment plan on a secured loan with a final status of “Paid in Full”. With diligence, perseverance, and commitment to the program, the effort pays off handsomely. For our subscribers, a twelve month process is capable of adding triple digits to a credit score with minimum expense.

With the security and confidence one feels when a lender figuratively puts their arm around a shoulder and helps establish a positive credit history without an exorbitant cost associated with it, one can see hope and encouragement exacting a positive influence in a ripple effect spreading much further than the immediate recipient.

The second area addresses inaccurate items listed on credit reports. The credit challenged often are seduced by and sold a dream. They just want someone else take away all the bad from their record so that they don’t have to deal with it and then, magically hope and expect their credit scores will shoot skyward. Sometimes, someone whispers in their ear exactly what they want to hear.

Very often, in the hard, cold, light of dawn that kind of pillow talk turns out to be an illusion. However, the sizzle that sells the steak of such promises is that the credit reporting agencies can be intimidating, the reports confusing, the companies themselves inclined to protect their corporate interests and not that of the consumers, are much more knowledgeable of their rights than most consumers, and typically are operating from a position of superior knowledge. Not to mention, they profit from negative items remaining on consumer credit reports. It is no wonder people don’t want to face down what they consider to be a man-eating troll hiding under the credit reporting bridge. To the uneducated or unsophisticated, it can be an impossible task.

But, with applied knowledge comes power, so we have created a program to educate and empower in this discipline. Inaccurate information can be removed and there is nothing wrong, illegal or immoral with requesting inaccurate items be investigated and if unable to be verified, to have each one of them deleted. Such protection for the consumer and requirements on the credit reporting agencies is afforded all of us under United States federal law and specifically, the Fair Credit Reporting Act.

When a credit report doesn’t look like a foreign language, it becomes clear why some estimates place the number of reports containing errors at 70% (probably more). And, if an item contains an error and is inaccurate, it has to be removed.

Then we added what we think is the final component: education, guidance and encouragement for making better decisions about credit, goal setting and having a positive attitude. To say there is no social stigma or psychological scars attached to filing bankruptcy anymore is simply not true. The fact is, it is hard to overcome any obstacle if you are despondent, but with the right tools, one can make some positive changes.

Credit re-establishment is the application of all three components we have outlined to figuratively create a three legged stool. With each of them in place and working, a person’s credit scores can increase by as much as 100 to 200 points or more in a calendar year, goals can materialize when none existed before and financial stability can be attained.

Poor credit does not have to remain an economic death sentence, or necessarily a mandatory seven year sentence of servitude while in credit solitary confinement. Nor is it reason to expect or accept second class citizenship status.

The truth is, there is no stopping someone that chooses achievement and then works to implement it in their life. And, when willing to apply knowledge, exert some effort and follow a plan, there is no need to live a “sub-prime” position in life now or ever.

Pat Hicks is the creator and author of, “The Complete Guide to Credit Re-Establishment” program found on the web site, http://www.freshstartcreditscores.com.

Real Estate professionals, mortgage lenders, builders, on site sales staff and anyone interested in improving their client’s or their own credit scores are invited to visit and to enroll. His email address is: jphicks@sbcglobal.net.

Financial Literacy Course to Copy Across America!

This is fantastic! Every school in America should look at this program and do their own version. Financial literacy is arguably the single greatest issue for young adults today and I am thrilled to see something like this in place!

College Credit Schools must address financial literacy in the face of increased personal debt. By Julia O'Donoghue April 6, 2007 George Mason University student Ross Varndell is unusual for a college junior in the United States. He has no credit cards. "I personally don't carry credit cards. I am afraid if I have one, I will spend a lot of money," he said between bites of a chicken sandwich in the Fairfax university's student union last week. The electrical engineering student said he earned about $6,000 last summer working three jobs as a tennis teacher, furniture mover and a golf course caddy. He has used that money to pay for textbooks, food, gas and entertainment during the school year. Varndell said he may ask his parents for financial help if money gets really tight but he won't apply for a credit card, even though he receives one to two offers per week. The 24 year-old, who grew up in Arlington, is the exception to the rule. 95 percent of college students carried credit cards in 2000, according to Business Week, but many experts say have not been taught how to manage their money. "There are more credit card offers and more credit card issues. There are cell phone bills and a number of other financial issues that generations before have not had to deal with," said Todd Romer, executive director of "Young Money," a money and lifestyle magazine for young adults. "There is a strong need for financial education," Romer said. "We think it would make sense for every high school or college to mandate a personal finance class." For the most part, Virginia appears to be doing exactly what Romer and other experts have requested. In 2005, the General Assembly passed legislation that mandates financial literacy training for public middle school students, high school students and freshman attending a Virginia public university or college. Introduced by Sen. Russell Potts, the mandate requires the state Board of Education to incorporate financial literacy into Virginia’s Standards of Learning for secondary school. STUDENTS WILL learn about topics such as judging the quality of a financial institution’s services, balancing a checkbook, the implications of inheritance, the basics of personal insurance policies, debt management, and how to contest an incorrect bill. The legislation also requires public universities and colleges to teach financial literacy either through a required general education course or freshman orientation. The college component would focus on some of the same topics as those taught in secondary school but also includes managing student loans and credit card use. The legislation was expanded this year. Delegate Dwight Jones (D-70) introduced legislation to expand the university financial literacy program to include predatory lending practices, consumer fraud and identity theft and protection. Gov. Tim Kaine has also declared April 2007 financial literacy month. Potts has "always been concerned about the solicitation of credit cards to college students," said his legislative aide Lana Westfall. The senator decided to introduce legislation after he met Muriel Siebert – a New York City businesswoman who was pushing similar legislation around the country – at a cocktail party. Siebert – who, in 1967, became the first women to join the New York Stock Exchange – had successfully pushed to have a financial literacy program included in the New York City public schools curriculum. As superintendent of New York’s banks in the late 1970s and early 1980s, she discovered that some people were being taken advantage of through check-cashing programs because they never learned how to open a checking account. "People who have the least pay the most for everything. There was a lack of education of anything financial for kids," said June Jaffe, executive director of the Muriel Siebert Foundation. In addition to New York City schools, the public school systems in Miami-Dade County and Palm Beach in Florida are adopting a financial literacy curriculum and Austin is testing a pilot program. Connecticut is also on the verge of pass legislation similar to Virginia’s, said Siebert. "I want to make it national. We need to send these people into the real world prepared," said Siebert. IN VIRGINIA, the state Board of Education has incorporated financial literacy – particularly programs about budgeting and credit card debt – into the state’s Standards of Learning, though the material is not included on Virginia’s annual standardized assessment. Individual school systems can decide how the material will be incorporated in middle and high school. "Some schools are going to have a mandated semester requirement but that is not going to be possible in Fairfax. [In Fairfax] financial literacy will be taught in middle school math and social studies and in high school math and government," said Mary Shaw, spokesperson for Fairfax County Public Schools. Shaw added that the school system plans to fully implement the new financial curriculum next school year. Currently, Fairfax and other Northern Virginia school systems teach a significant portion of their financial literacy programming in business and consumer finance electives in high schools. Students in the Academy of Finance at T.C. Williams in Alexandria have opened a credit union at school and learn basic financial skills like how to plan for renting or buying a house. The program – which includes 72 students – also teaches students about responsible loans and taxes, said Matlea Parker, the academy’s director. "This is not something that the general population receives," said Parker, who explained the classes in the Academy of Finance are only open to select students. She added that most of the material is also covered in a business finance class open to the student body but the class is an elective and only certain students take it. WITH THE NEW mandate through the legislation, Parker said the Alexandria school system is looking to incorporate financial literacy into required courses, such as government. Arlington County Public Schools currently provides a series of activities to all high school math teachers covering topics such as credit card responsibility and how to read a pay stub, said Patricia Robertson, the school system’s mathematics supervisor. Robertson said she did not believe financial literacy was taught at the middle school level. Fifteen Arlington students can participate in the Banking, Finance and Investment program at the Arlington Career Center that operates an in-school credit union branch, said the director of the program Lisa Moore. The center also runs a program about how to buy car, which is open to all seniors. "Many of them are eager to buy their first car. We tell them to be wary of high interest rates or putting no money down," said Moore. Mary Ellen McCormick said she tries to instill the dangers of credit card debt in all the students enrolled in her entrepreneurship class at Marshall High School in Fall Church. McCormick, whose 90 students come from all over the county to take the course, said she emphasizes that accumulating debt could affect more than just a student’s credit score. "Employers are checking their credit rating. It’s important for parents to understand that," said McCormick.

Great News! Sunlight is being allowed in on the Sub Prime Credit Cards!

Well, here we have Jane Bryant Quinn of Newsweek looking into the sub prime credit card abuses. This is great news for those of us that want some regulation back to curb the tactics used to bilk consumers. With the elections coming, this is an issue that will strike a chord with a lot of voters. Pardon my giggle, but I think I see some scurrying for cover starting. Yes!!



Quinn: The Nasty World of Subprime Credit Cards
By Jane Bryant Quinn
Newsweek

April 9, 2007 issue - In recent weeks, you've heard plenty about the sleazy side of the subprime mortgage business. Rising numbers of borrowers are losing their homes after being lured into high-cost mortgages they couldn't afford. But there's another piece of the painful subprime story that hasn't hit the headlines yet: costly—sometimes abusive—subprime credit cards. They're bleeding millions of borrowers who didn't know what they were getting into.

Subprime borrowers tend to have credit scores under 660. They've missed or defaulted on payments in the past and already carry a lot of debt. But even prime borrowers, with credit scores solidly in the 700s, can slide into subprime status if they're late on a couple of payments.
Subprimes come in two types: Cards that are crazily costly to begin with and cards that look good but hide big traps. You know about traps if you've paid some bills late and are now being charged with interest at 30 percent. In general, here's how the business works:
The bottom-feeding cards—for people with damaged credit—offer you a decent interest rate on credit lines "up to" $3,000. When the card arrives, however, your line might be only $250. And then come the fees! "Program" fees. Account set-up fees. Participation fees. Annual fees. They're charged to your tiny credit line, leaving you almost nothing to spend.

Take the First Premier Bank Gold Card, at 9.9 percent interest with a $250 line. After charging upfront fees, however, you start out with a debt of $178 and just $72 extra to spend. Or the First Bank of Delaware's Continental Finance card, at 19.92 percent interest, where a $300 credit limit shrinks to $53 after upfront fees. When you start using either card, you'll be charged $6 or $10 a month. One little purchase puts you over the limit. That unleashes a $25 or $30 over-limit fee, plus another $25 or $30 if you pay late. As a further penalty, First Premier can double your interest rate. You could wind up owing thousands of dollars in compounding fees.
First Bank of Delaware didn't respond to questions. Miles Beacom, First Premier Bankcard's CEO, says the cost of these cards reflects how risky the borrower is. But if someone can't afford a small payment, why is he getting more credit at all? These cards target people of modest means, says credit expert Robert Manning, adviser to the film "In Debt We Trust," to be released this month. At some point, aggressive lending turns into abuse.

Two better-known card issuers with a big subprime business are Capital One and HSBC's Orchard Bank. They charge lower upfront fees than other cards do. But if you fall behind, it's tough. Cap One's penalty rate is currently 28.15 percent. Orchard Bank doesn't disclose its penalty rate online and wouldn't tell me what it is (that didn't engender confidence!). Cap One has a reputation for issuing multiple cards to people who bump up against their credit limits. That gives them two cards, with two low limits, to overspend. John Finneran, Cap One's general counsel, says that customers choose to have multiple cards for various reasons and have the option of combining them into one.

Lenders have figured out many ways of extracting fees. There's "universal default," where a late payment on one card can trigger high penalty rates on every card you own. There's the "endless late fee," where your payments never catch up with the new penalties you're charged. (Banks don't cancel your cards, as they did in the old days; they just keep charging until you break.) There's "two-cycle billing"—too complicated to explain here, but which amounts to charging interest on balances that you've already paid. And "retroactive price hikes," where banks impose higher rates on old balances as well as new ones. "What other business can get away with raising the price of something you already purchased?" says Travis Plunkett of the Consumer Federation of America.

These practices startle consumers who think such high fees and interest rates must be against the law. But the Supreme Court effectively deregulated credit card rates 30 years ago, and 10 years ago it deregulated the size of the fees a bank could charge. Prior to fee deregulation, late fees hovered between $13 and $15, says Robert McKinley of CardWeb.com, which tracks the business. Now they run from $30 to $40. "It's out of control," he says. "Banks know they've pushed this too far."

So far, they've gotten away with it. Congress ignored it and the regulators slept. Occasional court cases pop up. Last year, New York State fined Cross Country Bank (now the Applied Card Bank) $9 million for various deceptive practices. Applied's attorney denies the allegations. Capital One recently settled a class-action lawsuit, also alleging deceptive acts. (To read what consumers say about these and other cards, go to Consumeraffairs.com).

This year, however, the new Congress started holding hearings. Suddenly Citi dropped universal default and JPMorgan Chase ended two-cycle billing. But those are just gestures. Without fee caps or usury laws, we're in the bankers' hands.

Reporter Associate: Temma Ehrenfeld
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Banks, Feeling the Heat from the Democratic Congress Begin to Address Universal Default Abuses

Finally the credit card companies are taking some action, but it's just to get the heat off them. Hopefully, Congress will not let them squirm their way out of being on the receiving end of tighter regulations, which are sorely needed.

This is an article by Pamela Yip of the Dallas Morning News addressing the responses being touted by the banks which, in my opinion, are nothing more than just a couple of displays of basic decency that has been lacking for way too long. They should have never allowed additional credit history to affect the rates of credit cards as long as the payment history was acceptable in the first place.

When I see the banking regulations in place that should have addressed the industry abuses long before now, I will actually have cause for celebratory cheers.

Credit card companies pushed to change

07:39 AM CDT on Monday, March 12, 2007

Credit card companies are starting to feel the heat from Congress.

Democrats, aiming to fulfill their promise to improve the financial lot of average Americans, have cast a sharp eye at the lending practices of financial institutions, particularly in the area of credit cards.

"The credit card industry thrives on the confusion and powerlessness of consumers to both nickel-and-dime the average cardholder and to commit highway robbery of anyone who slips up even in the slightest," said Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations, which held a hearing last week on credit card practices.

Credit card issuers are taking notice – and action.

Citi Cards said recently it's ending "universal default," the policy of increasing your interest rate if it discovers any late payments on your credit report. It didn't matter if you'd never made a late payment to that particular credit card company.

Citi also said it's doing away with "any time, for any reason" increases to the rates and fees of its cardholders.

Chase Card Services, meanwhile, has announced its "Clear and Simple Initiative," which includes expanding its program of contacting cardholders having financial problems and recommending options to solve their problems. The bank also said it's studying ways to make its disclosures clearer.

"We are both looking at our practices and looking at public perception and what our customers are saying about things," said Paul Hartwick, Chase spokesman. "We thought this was the right time to take a look at how we could be more clear with our customers."

Chase also plans to offer online payment calculators to help customers understand how their credit card payments will affect their account balances over time. It's reminding consumers about their ability to get free online alerts to help them stay current on their card payments.

Capital One boasts that it has "never had a universal default policy."

"There is only one circumstance in which a customer might be subject to default repricing – if they pay us more than three days late twice in a 12-month period," John Finneran, general counsel for Capital One, told Congress. "The decision to reprice is not automatic. For many customers, Capital One often chooses not to do so. If we do reprice someone for paying late twice, we will let them earn back their prior rate by paying us on time for 12 consecutive months."

Raising rates, fees

Credit card issuers traditionally have taken the position that they can increase the rates and fees of a cardholder's account at any time for any reason for things as nebulous as "general conditions in the financial markets."

Under Citi's new policy, the bank won't increase the rates and fees of a card account until the card expires and a new card is issued, which typically is in two years.

The company said now it will hike rates and fees before a card expires only if you pay your bill late, exceed your credit limit or pay with a check that bounces.

Another exception is if the prime rate moves up. Most variable-rate cards are tied to the prime rate.

"We believe that making changes to what have been – until now – basic credit card practices is proof of our ongoing commitment to put our customers first," said Vik Atal, chairman and chief executive at Citi Cards.

Yeah, right.

Industry responds

The only reason card issuers are doing all this is because they can smell the scent of tougher regulation on their heels. They frame it as wanting to remain competitive in the marketplace – what they're really doing is realizing that Congress is listening to consumers who are fed up with the heavy-handed tactics of credit card companies.

"The industry is sensitive to congressional needs," said Ken Clayton, managing director of card policy at the American Bankers Association. "It's also sensitive to the marketplace. Clearly, the hearings bring a greater focus on some of these practices and the industry response to it."

Bigger steps needed

Consumer advocates haven't been impressed with the credit card companies' actions.

"So far, many of the proposals center around providing more consumer education, greater disclosure and are Web-based," said Norma Garcia, senior attorney at Consumers Union. "These changes, however, are no substitute for the real reform consumers need to make the marketplace fair. What good is it to tell consumers in a more clear fashion that your company engages in unfair practices when what really needs to happen is to stop engaging in the practices in the first place?"

Credit card companies also needed to clean up their act on their own, not just after politicians and regulators started breathing down their necks.

"Congress is finally taking a hard look at the credit card industry," said Ed Mierzwinski, consumer advocate in the Washington office of the Texas Public Interest Research Group. "The industry is simply taking minimal prophylactic steps to deter actual reform legislation and protect the most profitable form of banking – credit card banking."

The buzz over credit cards comes at a time when the issue is starring in the movies: Maxed Out, a documentary now playing at the Inwood Theatre at 5458 W. Lovers Lane, is about how easy it is to fall into credit card debt and the sometimes tragic consequences.

Some credit card executives should buy a ticket.

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An Answer to Conservative Critics that Call for More Personal Responsibilty for Individual Consumer Debt Increases

Some of this is old news but it is what the congressional committees are investigating at this moment, i.e., Tricks and Traps to squeeze every last dime out of the credit card customer.

There is a term one finds in the real estate industry that, if ignored, can get one sued very quickly. It is, "Operating from a position of superior knowledge". If a professional Realtor takes advantage of a less knowledgeable client by using their superior knowledge to steer or fail to advise a client in order to benefit from a transaction, then they are operating from a position of superior knowledge and are subject to criminal penalities imposed by the legal system.

While I recognize that there are many critics that are upset when there is no mention of "Personal Responsibility" for the users of credit cards while the banking industry is vilified by articles like this one, I also think one can use the same thought process when making a comparison to the cigarette companies. It was personal choice and not the fault of the cigarette manufacturers to choose to succumb to constant marketing, half truths and lies about nicotine addiction and become a smoker; usually at an early age before one was capable of making truly mature choices (Please see credit card application booths on Spring Break beaches).

So, to me the issue is moral accountability. If it is somehow morally reprehensible or morally deficient to purchase any goods or services but then choose not to pay on a credit card at usury rates with exorbitant Tricks and Traps fees, there is also a corporate moral obligation for the credit card companies as there was with the tobacco companies, to show some accountability, restraint and self regulation as well.

The three main reasons for 92% of bankruptcy in America is job lay off, divorce and medical emergency. There is no statistical proof that the percentage of impulse buying has increased in forty years and bank profits have tripled since 1970 even adjusting for inflation after the introduction of credit cards.

So, how about the banks and credit card companies do some self regulating of their own, if they think the consumer should as well, and cease inundating every mail box in America with six billion "pre-approval" offers as they did last year.

The fastest growing segment of the population with credit card debt are seniors and the fastest growing group within this category are seniors seventy five years of age and older. Why? Health care costs. Just what do we expect people of that age group to do when they simply don't have the income to pay for adequate health care? A recent study found that 29% of families caring credit card debt attributed medical expenses as a major contributing factor.

Again, personal responsibility is certainly something that should be addressed in this discussion, but if that is true, and I do believe it is, then there is corporate moral accountability as well. I personally am indignant and angry that the individual, operating from a position of inferior knowledge to the banking, credit card and collections industry is expected to show personal responsibility by choosing inadequate health care or no health care over using their credit card which they are struggling to pay.

If the individual is expected to show personal responsibility for incurring debt to buy groceries for their families if the husband or wife has been laid off or if there is no child support payment in the mail, then we, as a nation, should expect the same corporate accountability and moral compass to govern the actions of the issuers of credit cards rather than the truly indefensible and morally bankrupt tactics used to pad their profits even more from the wallets of those least able to afford it for which the banking industry currently labels as acceptable common business practices.

The following touches on just some of the tactics used by the banking industry, but certainly not all of them and really, not the worst.

Credit Card Tricks and Tactics: What You Should Know

Rated:

Credit cards are regarded with high suspicion by many people. However, some of these same people use multiple credit cards! If you can't avoid using credit cards (perhaps due to necessity), it's wise to at least watch out for the shady tactics some credit companies employ.

The bottom line is this: Consumers are not properly informed. Rising credit card fees and interest rates, coupled with barely understandable credit card disclosure statements and agreements, make for customers who are easily lured into the jaws of debt.

Some stats to give you an overview: according to this 2004 article, there are more than 641 million credit cards in circulation, and this "plastic money" accounts for an estimated $1.5 trillion of consumer spending in the USA. Alarmingly, penalty fees (e.g. for late payment) nearly tripled from $13 in 1995 to as much as $34 in 2005, as stated in this Consumer Affairs report.

The List of Dread

Watch out for these tricks and tactics, as falling into one might be enough to ruin your personal finances. Some of these might not apply to your credit card company, but as a rule, the big boys of the credit card industry employ a slew of these.

• Incomprehensible, unreadable fine print -- Even lawyers have a tough time deciphering credit cardholder agreements, because companies have spent huge bucks on making sure they're hard to understand. The true risks and fees are all there alright, but covered up in alien text, they're effectively hidden from you.
• Encouraging you to pay late -- This includes mailing your statement as close to the due date as possible, suddenly changing the due date (e.g. from the 25th of each month to the 23rd), setting the due date on a Sunday or holiday, setting a specific time of day when your payment must arrive (and a minute later, you're already considered late!), and even not mailing out statements at all.
• $29 late fees -- Is this a little bit high or what?
• Balance transfer fees -- You might be enticed to transfer debt from an existing card to one with a low interest rate. Beware, as there's usually a high transaction fee (for example, 5%).
• Over-limit fees -- With every month that you're over the credit limit, companies will charge you as much as $39 in over-limit fees. Ah, what happened to the time when they'll just deny any card transaction that puts you over the limit?
• Jacking up your interest rate -- Some companies do this when you carry a big balance (under the guise that you're a "high risk") or when you pay your statements late.
• Low introductory rates that quickly shoot up the stars -- Many people fall for this, but don't realize that once the shortintroductory period is over, they'll suffer rates as high as 24%.
• Not-using-your-card-enough charge -- If you won't use their card for several months (and thus deprive them of earnings), they'll still earn from your account, no matter what, through an inactivity fee.
• 15 days' notice to change the contract -- The terms and conditions of your agreement with the credit card company can be changed at any time, for any reason with 15 days' notice. Who changes the terms? The company, of course. Is this legal? Unfortunately, yes. What can they change? Your interest rate, above all things.
• Minimum payments -- This one might sound good, but when you're only required to pay 2% of your total balance each month, your run the risk of paying off for a long, long time, even passing off your debt to your kids and grandkids.
• Monitoring your credit report -- Yes, some companies check your overall credit history. If they see you've got huge debts and/or late payments with other credit companies, they can slap you an interest rate hike.
• Preying on young consumers -- College students have long been fodder for credit card solicitations, but now companies are reaching out to high school students, who are not only financially dependent most of the time, but are also psychologically and logically unprepared.
• Preying on poor consumers -- Companies do this because know they'll be able to reap all sorts of fees and penalties from these "sweet spots". And if these poor chaps have just emerged from bankruptcy, companies know these customers won't be able to declare bankruptcy for another six years.
• Closure fees -- Because they if you're parting with the credit companies, they'll at least want to milk your wallet one last time.
• Issuing multiple low-limit cards instead of increasing your limit -- This raises the odds of you going over your credit limit, and thus paying more penalties. This article describes one such awful, real life case.
• Anti-customer 'customer service' -- We're guessing that the sooner you give up on the frustrating customer service call, the companies' chances of getting away with their elaborate traps and tricks are better.

What Can You Do?

By reading this article, you've taken an important action to protect yourself and your finances. At least by now, you're aware of these nasty credit card pitfalls. Here are a few more pieces of advice:

• Read the fine print -- The credit card's terms and conditions might look convoluted (not to mention miniscule), but this is the first and most important step. Know what you're getting into. If your brain can't handle the stress of reading such hieroglyphical fine print, ask a close relative/friend of yours to read it for you.
• Opt out from junk mail and telemarketing calls -- Save yourself the temptation of pre-approved credit card offers and other too-good-to-be-true things.
• Check your credit report and score often -- As mentioned earlier, some companies check on your credit report, looking for an excuse to charge you more. What they know, you should also know, right?
• Read up on the latest news and federal policies relating to credit cards
• Check your monthly statements -- It won't do any good for your debt if improper charges and penalties make it to your bill, and you actually pay for them in ignorance.
• Avoid 'debt elimination' scams -- Case in point can be found here. Always remember that there are no magic quick fixes to credit card debt. It takes time and discipline, among other things.
• Don't max out your credit cards -- A simple tip that isn't observed by a lot of cardholders.
• If you have been wronged, report it to the proper authorities
• Don't accept new credit cards, especially from the same company -- Instead, ask for a higher credit limit on the card you already have.
• Call up your company and ask for lower rates -- Sounds difficult? Surprisingly not. You are the customer, after all, and they want/need your money. Be polite but firm when talking to the representative (or supervisor, if you work your way up the chain). Tell them of great offers from other creditors (and be sure to know these offers well, don't lie, don't just bluff!), and if they aren't budging, tell them you'll take your money elsewhere.
• Know your consumer rights -- A good place to start would be the Federal Trade Commission website.

Of course, the best tip we can give you is to use your credit cards sparingly!

This was found at Article Interest:
http://www.interest.org/article/interest-basic-information/credit-card-tricks-and-tactics-what-you-should-know.html

Don't you just love it?! More tricks by the Credit Card companies you need to know about.

Ten Secrets Banks Don't Want You to Know About Credit Cards

• Interest Backdating Most card issuers charge interest from the day a charge is posted to your account if you don't pay in full monthly. But, some charge interest from the date of purchase, days before they have even paid the store on your behalf!

  
  Remedy: Find another card issuer, or always pay your bill in full by the due date.

  
  
• Two-Cycle Billing: Issuers using this method of calculating interest charge two months’ worth of interest for the first month you failed to pay off your total balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month.

  
  Remedy: Switch issuers or always pay your balance in full.

  
  
• The Right to Setoff: If you have money on deposit at a bank and also have your credit card there, you may have signed an agreement when you opened the deposit account that permits the bank to take those funds if you become delinquent on your credit card.

  
  Remedy: Bank at separate institutions, or avoid delinquencies.

  
  
• Fees Are Negotiable: You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of more than 18 percent.

  
  Remedy: If you are a good customer, ask the bank to drop the annual fee and reduce the interest rate. Otherwise, you can switch issuers to a lower-priced card.

  
  
• Interest Rate Hikes Are Retroactive: If you sign up for a credit card with a low "teaser" rate, such as 7.9 percent, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate.

  
  Remedy: Pay in full before the rate increase or close the account.

  
  
• Shortened Due Dates: Most card issuers offer a 25-day grace period in which to pay for new purchases without incurring finance charges. Some banks have shortened the grace period to 20 days -- but only for customers who pay in full monthly.

  
  Remedy: Ask to go back to 25 days.

  
  
• Eliminating Grace Periods: That fabulous offer you received in the mail for a gold card with a $10,000 credit limit and lots of features may not be so great. The most common "string" attached is the card has no grace period. You are charged interest on everything from the day you buy it, even if you pay on time.

  
  Remedy: Throw the offer out!

  
  
• Disappearing Benefits: Many banks entice you to sign up with extra benefits such as lifetime warranty, a 5 percent discount on all travel or protection if an item purchased is lost. Now, some banks have cut back on these extras without the fanfare that launched them.

  
  Remedy: Read annual disclosure of changes, and switch cards if need be.

  
  
• Double Fees on Cash Advances: Most credit cards impose both finance charges and a transaction fee on cash advances. Interest starts from the day of the advance, and the transaction fee can be up to 2.5 percent of the amount taken. Beware of cards advertising "no finance charges." Transaction fees may still apply.

  
  Remedy: Limit cash advances.

  
  
• Misleading Monthly Minimums: You may think it is beneficial to have a card where you only need to pay 2 percent to 3 percent of your balance monthly. It is just the opposite. The bank stands to make far more money from finance charges the longer you carry out payments -- and you foot the bill.

  
  Remedy: Pay all you can monthly.

Congress Investigates Credit Card Interest Rate Abuses

Congress is investigating the imcomprehensible language in credit card agreements that address the interest rates to be charged. Here is the latest salvo.

Panel slams banks over credit practices

By MARCY GORDON, AP Business Writer 1 hour, 42 minutes ago

WASHINGTON - An Ohio man whose $3,200 credit card debt mushroomed to $10,700 with interest and fees told his story Wednesday to senators who denounced the industry for confusing billing practices and shifting interest rates.

Executives of three major banks defended their credit card practices as responsible and responsive to consumers' needs in testimony at the hearing of the Senate

Homeland Security

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Homeland Security and Governmental Affairs' investigative subcommittee. Those from Citigroup Inc. and Chase Bank USA said their companies were eliminating some practices — including the one that hit Wesley Wannemacher of Lima, Ohio, with over-limit fees on his Chase card account 47 times although he went over his credit limit only three times.

The interest charges and fees on Wannemacher's account more than tripled his debt despite his having made payments averaging $1,000 a year over six years, noted Sen. Carl Levin (news, bio, voting record), D-Mich., the subcommittee's chairman.

"Unfair? Clearly, I think," Levin said. He said an investigation by the panel found that "sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by Bank of America, Citigroup and other major credit card issuers."

Richard Srednicki, the chief executive officer of Chase Card Services, apologized to Wannemacher in his testimony. "In this case, we simply blew it," he said.

Srednicki said the company has decided it no longer will charge over-the-credit-limit fees to customers who have been in a chronic over-limit position for 90 days.

Wannemacher used a new Chase card in 2001 and 2002 to pay for expenses mostly related to his wedding. He had $3,200 in purchases, interest charges of $4,900, 47 over-limit charges totaling $1,500, late fees of $1,100, for total charges of $10,700 as of February. He paid $6,300, leaving a $4,400 balance — which Chase agreed to waive after he contacted the subcommittee staff.

"Debt seems to invoke a feeling of hopelessness unlike any other problem I've encountered," Wannemacher testified at the hearing. "When a debtor calls you on the phone and you make a minimum payment, you know that you've made no real progress and that in a month, they will be calling again."

Sen. Norm Coleman (news, bio, voting record) of Minnesota, the panel's senior Republican, said high interest rates on credit cards, "hefty fees and crippling penalties impede more and more hard-working families from pursuing their American dream."

The problem is worsened by the "impenetrable" language of credit card disclosures provided to consumers, he said.

While the credit card practices in question are legal, Levin is threatening possible legislation to outlaw them as a spur to the banking industry for voluntary changes.

Senate Banking Committee Chairman Christopher Dodd (news, bio, voting record) and other Democratic senators challenged credit card executives at a hearing in January over rising late fees and other penalties and marketing practices they portrayed as predatory. Dodd, D-Conn., said he was putting the industry on notice that if it doesn't improve practices on its own, legislation may be warranted.

Since Democrats assumed control of Congress in January, they have put a number of consumer issues on the legislative agenda. With Americans weighed down by some $850 billion in consumer debt, the practices of the robustly profitable credit card industry are a compelling subject for scrutiny.

Citigroup, the nation's largest financial institution, announced last week that it was eliminating the practice of so-called universal default — raising interest rates for card customers because of their failure to pay other creditors on time. In addition, Citigroup said it would eliminate some types of interest rate increases that have been criticized.

Credit card issuers raise customers' rates and fees, for example, when they believe it is warranted by conditions in the financial markets. But under Citigroup's new policy, rates and fees will be increased before a card expires only if the customer pays late, exceeds his credit limit or pays with a check that bounces. Or if the rate is linked to the prime interest rate, it would rise or fall in tandem.

Verification/Validation

I recently received a request for advice from a member of one of my groups as follows:

"Any help would be welcomed. I have an old debt. One that was at a local [Name Withheld], then the [Name Withheld] closed down. I had a 300 credit limit. This was exchanged to a new company [Name Withheld]. By the time I had received it the debt was jacked up in interest and late payment rates, to the tune of 1001.75. I recently got a letter from a new debt collection agency, So I used the validation letter, sent it certified mail. They opened it and signed for it 1 day after the 30 days even though I sent it in ample time. This was signed for Nov 13. I just received a letter from them typed,

"Our records indicate the account was opened on Nov 22, 1998, last purchase Oct 9, 1999 and last payment May 25, 2002. We have no record of returned mail sent to the current or previous billing address on this account. The fair credit billing act requires that any dispute be received no later than 60 days after the first bill was transmitted that reflects the alleged billing error and the Fair Credit Reporting Act requires that information sufficient to identify the specific information in dispute be provided. This information should included the exact date of the transaction and amount in dispute. Additionally, the Fair Credit Collections Practices Act does not state that we have an obligation to forward copies of previously sent billing statements. We have no record of your disputing the account balance or specific transaction during the applicable time periods and your letter does not provide sufficient information for us to investigate any possible dispute, we shall consider our provision of the information above as validation of the debt. If you have information concerning a specific dispute, please forward it to us for consideration. Due to the serious level of delinquency, the account was charged off on February 17,2003 and placed with the first of several outside collection agencies. The unpaid balance will remain on our records and the account will continue to report as an unpaid charge off for the period of time permitted by federal law.

Please be advised that we reserve the right to take whatever action are legally available to protect our interest. "

It is with a collection agency. I'm really confused. I thought that I send a letter to have them prove the charges, I only used 300 on my old [Name Withheld] card. Then if they couldn't prove it Poof. What legal rights do they have here with a charge off???"

I feel this letter serves as an excellent example of how a collection agency should NOT respond to a request for validation and my response to the poster was as follows:

"First … lets address the issue of whether or not your dispute of the debt was timely.

Timely Dispute

30 Days run from the date “validation letter” is received … not from the date it was sent.

"The Supreme Court has stated that "[a] statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." U.S. v. Campos-Serrano, 404 U.S. 293, 92 S.Ct. 471, 30 L.Ed.2d 457 (1971) (quoting Washington Mkt. Co. v. Hoffman, 101 U.S. 112, 115-16, 25 L.Ed. 782(1879)). All provisions of the statute must be considered and each term must be interpreted equally, so as not to deflect from the meaning of the statute. West v. Nationwide Credit, 998 F.Supp. 642, 644 (W.D.N.C.1998). Specifically, as to 15 U.S.C. § 1692, every clause and word must be given force" http://caselaw.home.comcast.net/files/BLAIR-v-SHERMAN.doc

The courts do not simply ignore words within statute.

Fair Debt Collection Practices Act 1692g a 3 > http://www4.law.cornell.edu/uscode/html/uscode15/usc_sec_15_00001692---g000-.html

(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—
(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

You have 30 days from the date you RECEIVED the “validation letter”, not from the time they sent it, no matter what claims or demands are made along with the above required statements.

Dispute must be mailed within 30 days, not be received by the Collection Agency within 30 days.

They need not receive your dispute letter within that 30 days so long as you mailed it within 30 days. To claim otherwise would undercut the validation period clearly specified within the Fair Debt Collection Practices Act.

“Nothing in Section 1692g requires, and we have found no other court decision which has required, that the debt collector must receive notice of the dispute within thirty days as defendant insists….. If we were to hold that the validation request must be received by the thirtieth day, we would be rewriting Section 1692g, which we are not entitled to do.” http://caselaw.home.comcast.net/files/CHAUNCEY-v-JDR.rtf

You have proof of when you sent your letter; do you still have the postmarked envelope their letter came in? Or, did you mail your dispute within 30 days of the date of the letter? You can also safely add 3 days to the postmark date ... if you don't recall exactly what date you received the letter.

Having all three dates … Date you received the letter, Date of the postmark and Date of the letter are all nice to have. The date you received the letter is the important date but the other dates can help establish the date it was received if you don’t know the date it was received. A notation of when it was received is best, Date it was postmarked is the next, Date of the letter itself is the least important. If you mailed your dispute within 30 days of the date on the letter itself you are in the clear. I have personally seen a letter sent by a Collection Agency where the letter was dated 10 days before the postmark, which is why that date is the least important or reliable.


Having established that you did in fact timely dispute the debt, we move on to whether or not the collection agency appropriately verified the debt.

Verification of the Debt

Does reiterating information from the Collector Own database suffice as verification?

1692g b states as follows: “(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.”


As noted above, “every clause and word must be given force”.

The use of the word “until” by the drafters clearly indicates that the Collection Agency does NOT currently posses what is required to provide appropriate verification of the debt. To assume otherwise would render the word “until” meaningless within the context of the statute. The same applies to the word “obtains”. One does not need to obtain what they already posses. To assume they already have what is necessary to provide appropriate verification would render the word “obtain” meaningless within the context of the statute.

To conclude that the Collection Agency must only refer to the information already in their possession would not only render the words “until” and “obtain” meaningless but would render entire sections of the statute meaningless. Namely: 1692 g a 3, 1692 g a 4 and 1692 g b.

ver·i·fy to ascertain the truth or correctness of

If we concluded that the Collection Agency does already posses the information required to verify … what would they be ascertaining the correctness of? That the printer in fact printed correctly and/or that the post office is actually capable of delivering a letter to the correct address? (no comments from the peanut gallery!)

The conclusion is that the Collection Agency MUST (if they wish to continue to attempt to collect) contact the original creditor to obtain the necessary information and documents to verify the debt. This must then be forwarded to the Consumer.

A Collection Agency who merely parrots information already contained in their database in response to a dispute violates the statute as soon as they make another demand for payment.

What information must be obtained and forwarded to verify the debt?

This is an elusive answer. This issue has been relegated to being judged on a case by case basis in the courts. As such it is extremely difficult lay out in no uncertain terms what constitutes appropriate verification. We can look to court cases for guidance.

In GUERRERO-v-RJM the Collection Agency attempted to claim a letter was verification of a debt. It contained only "date that the account was opened, the date that the last payment was posted, the name and social security number listed on the account, and the current balance". The court found that this was not adequate verification of the debt and found that the letter also constituted an improper (given the lack of verification) attempt to collect the debt prior to providing verification and granted a summary judgment for the Plaintiff (consumer) on both issues. http://caselaw.home.comcast.net/files/GUERRERO-v-RJM.doc

In your case they did not provide you with the SS# nor did it state the current balance. As in the Guerrero case ... "The letter did not indicate the amount or basis of the charges underlying the current balance, nor did it indicate the dates on which such charges were incurred. ........The letter also failed to indicate whether interest was factored into the current balance, and, if so, at what rate and for what time period."

We can also look to the statute for some clarification. 15 U.S.C. § 1692 f 1 forbids “The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” Similarly, 1692 e 2 A forbids “The false representation of— (A) the character, amount, or legal status of any debt; or…”

The courts also strive to interpret statute so that the results are not absurd or irrational. The assumption that appropriate verification does not include an account statement detailing the amount and basis of the charges underlying the current balance, would lead to the absurd and irrational result that only by filing suit for violations of 1692 f 1 or 1692 e 2 A could the consumer confirm that they have not violated those sections.

Yet despite these failures ... your Collection Agency’s response clearly is a continued effort to collect the debt in stating "The unpaid balance will remain on our records and the account will continue to report as an unpaid charge off for the period of time permitted by federal law. Please be advised that we reserve the right to take whatever action are legally available to protect our interest."

Other violation contained in this letter

There are other violations contained in the letter you have quoted. The following addresses those violations.

15 U.S.C. § 1692 e states as follows: “A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.”


"We have no record of returned mail sent to the current or previous billing address on this account."

This is irrelevant ... what is relevant is that you received their letter containing the statements required by 1692g and that you timely responded by disputing the debt. That being the case they are required to cease collection until they have OBTAINED and provided verification, they have failed to do either as noted above. This also violates 1692 e generally and 1692 e 10, by falsely and deceptively implying that since you have allegedly failed to previously dispute the debt, the Collection Agency now has no obligation to acknowledge or respond to your dispute.

They have also stipulated in this letter that “Due to the serious level of delinquency, the account was charged off on February 17,2003 and placed with the first of several outside collection agencies”

It is highly unlikely, especially after having been through “several outside collection agencies”, that they would have any record of any previous communications to or from anyone regarding this account. It is highly likely that the only information they received on assignment of this account was: Name, last known address, last known phone number, SS#, Date of birth, Date of last purchase, Date of last payment, Date of Charge off, current (as of the time assigned) past due balance. The implication that such a record even exists false and deceptive. As such is another violation of 1692 e generally and 1692 e 10.

Any representation of what a record that does not exist does or does not contains is a false and deceptive means to collect a debt. As such, that representation is a violation of 1692 e generally and 1692 e 10.

The Fair Credit Billing Act

“CONSUMER CREDIT COST DISCLOSURE” is a subsection of CHAPTER 41—CONSUMER CREDIT PROTECTION. Fair Debt Collection Practices Act and Fair Credit Reporting Act also fall under the Chapter 41. What is commonly referred to as “The Fair Credit Billing Act” is a subsection of the “CONSUMER CREDIT COST DISCLOSURE” provisions of Federal Law and it can be found here: http://www4.law.cornell.edu/uscode/html/uscode15/usc_sup_01_15_10_41_20_I_30_D.html

Since the Fair Credit Billing Act is a subsection of “CONSUMER CREDIT COST DISCLOSURE”, the definitions contained in “CONSUMER CREDIT COST DISCLOSURE” apply to its subsections unless otherwise specified within a section.

The Fair Credit Billing Act defines “creditor” as follows: “creditor” refers only to a person who both

1. regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and
   
2. is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. Notwithstanding the preceding sentence, in the case of an open-end credit plan involving a credit card, the card issuer and any person who honors the credit card and offers a discount which is a finance charge are creditors. For the purpose of the requirements imposed under part D of this subchapter and sections 1637 (a)(5), 1637 (a)(6), 1637 (a)(7), 1637 (b)(1), 1637 (b)(2), 1637 (b)(3), 1637 (b)(8), and 1637 (b)(10) of this title, the term “creditor” shall also include card issuers whether or not the amount due is payable by agreement in more than four installments or the payment of a finance charge is or may be required, and the Board shall, by regulation, apply these requirements to such card issuers, to the extent appropriate, even though the requirements are by their terms applicable only to creditors offering open-end credit plans. Any person who originates 2 or more mortgages referred to in subsection (aa) of this section in any 12-month period or any person who originates 1 or more such mortgages through a mortgage broker shall be considered to be a creditor for purposes of this subchapter.”

A Collection Agency is NOT a creditor as defined by the Fair Credit Billing Act. The Fair Credit Billing Act applies only to “creditors” as defined by the Fair Credit Billing Act. A Collection Agency cannot enforce the Fair Credit Billing Act.

"The fair credit billing act requires that any dispute be received no later than 60 days after the first bill was transmitted that reflects the alleged billing error"

This is actually true, however, what they are leaving out is that the Fair Credit Billing Act does NOT apply to a 3rd party Collection Agency, it only applies to the Original Creditor and even if it did, the Fair Credit Billing Act does NOT exempt a Collection Agency from compliance with the Fair Debt Collection Practices Act. This situation/dispute is governed by the Fair Debt Collection Practices Act and as such they must meet the requirements of the Fair Debt Collection Practices Act.

If we accepted the contention that the requirements of disputes under the Fair Credit Billing Act could be applied to third party Collection Agency’s it would create an absurd and irrational result, that being … in the case of an identity theft or mistaken identity, the consumer cannot dispute the debt under the Fair Debt Collection Practices Act because they failed to dispute a debt that they likely did not know existed timely under the Fair Credit Billing Act. This would leave the victim of identity theft or mistaken identity powerless to defend their rights.

This would also in effect re-write the Fair Debt Collection Practices Act to exclude those who are collecting any debt, which at any point fell under the Fair Credit Billing Act, from the requirement to comply with 1692 g b. A statute cannot be read in such a way as to effectively re-write a different statute. Also an absurd and irrational result.

The implication that the Fair Credit Billing Act even applies to the current situation is a violation of 1692 e generally and 1692 e 10.

The implication that you have lost your rights under the Fair Debt Collection Practices Act because you failed to assert your rights under the Fair Credit Billing Act is a violation of 1692 e generally and 1692 e 10.

"Fair Credit Reporting Act requires that information sufficient to identify the specific information in dispute be provided."

(Actually, after further review, I stand corrected from my previous post.)

The Fair Credit Reporting Act does in fact require that specific information be provided. However, this situation is also governed by the Fair Debt Collection Practices Act and the Fair Debt Collection Practices Act places no such requirements on consumers.

"Unsophisticated consumers, whatever else may be said about them, cannot be expected to assert their § 1692 rights in legally precise phrases. It is therefore enough to put debt collectors on notice under § 1692 when a consumer states in plain English…." http://caselaw.home.comcast.net/files/HORKEY-v-JVDB.pdf

By implying that your failure to provide “specific information in dispute” under the Fair Credit Reporting Act excuses them from the requirement to comply with the Fair Debt Collection Practices Act they have violated 1692 e generally and 1692 e 10.

“This information should included the exact date of the transaction and amount in dispute.”

Falsely and deceptively implies that the consumer include more than “I dispute this debt” in violation of 1692 e generally and 1692 e 10.

“Additionally, the Fair Credit Collections Practices Act does not state that we have an obligation to forward copies of previously sent billing statements”

Was this a typo on your part?

“Fair Credit Collections Practices Act” Falsely and deceptively names the law that does govern them. I would guess in an effort to prevent you from finding out what your rights actually are.

I would label this not only as False and deceptive but also unfair and unconscionable means in attempting to collect a debt in violation of 1692 e generally and 1692 e 10, and 1692 f generally.

"We have no record of your disputing the account balance or specific transaction during the applicable time periods"

This is again falsely and deceptively implies that you must provide specific information in a dispute in violation of 1692 e generally and 1692 e 10. This also falsely and deceptively implies that you did not timely dispute, which you did, in violation of 1692 e generally and 1692 e 10.

“and your letter does not provide sufficient information for us to investigate any possible dispute"

I believe this is another repeated statement. This falsely and deceptively implies again that you must do more than state “I dispute this debt” in violation of 1692 e generally and 1692 e 10.

"we shall consider out provision of the information above as validation of the debt"

Falsely and deceptively implies that this letter suffices as appropriate verification in violation of 1692 e generally and 1692 e 10.

"If you have information concerning a specific dispute, please forward it to us for consideration."

Again, falsely and deceptively implies that you must dispute specific information in violation of 1692 e generally and 1692 e 10.

“The unpaid balance will remain on our records…”

Section e 5 of 15 U.S.C. § 1692 forbids “The threat to take any action that cannot legally be taken or that is not intended to be taken.”

This constitutes a threat to take an action, which cannot legally (they cannot legally continue to attempt to collect without providing verification) be taken especially since it was not qualified whether or not they consider it disputed. The letter makes it clear that they feel that you have not made a “valid” dispute. A possibly mistaken yet reasonable interpretation by an unsophisticated consumer, especially considering that the letter unequivocally denies that you have made a “valid” dispute. This is in violation of 1692 e generally, 1692 e 5, and 1692 e 10. This is also a separate violation than if they actually continue to collect, which would violate 1692 g b. As noted previously, this letter itself is an attempt to collect.

“…the account will continue to report as an unpaid charge off for the period of time permitted by federal law.”

Section e 8 of 15 U.S.C. § 1692 forbids “Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”

This letter also violates 15 U.S.C. § 1692 e 8 because they clearly states, “the account will continue to report as an unpaid charge off”, without clarifying that it will also be noted as disputed by the consumer. A possibly mistaken yet reasonable interpretation by an unsophisticated consumer, especially considering that the letter unequivocally denies that you have made a “valid” dispute. If in fact they fail to properly report that you have disputed this debt, it would constitute a separate violation of the same section of the statute.

They cannot legally report this debt without also reporting it as disputed. This makes the threat and the action also a violation of 15 U.S.C. § 1692 e 5.

“Please be advised that we reserve the right to take whatever action are legally available to protect our interest."

This constitutes a threat to take an action, which is not intended to be taken, that they will sue you. This statement violates of 1692 e generally, 1692 e 5, and 1692 e 10.

If this debt is time barred, then legal action cannot be taken. Any attempt to do so would constitute a separate violation of 1692 e generally, 1692 e 5, and 1692 e 10. The threat to take legal action on a time barred debt also misrepresents the legal status of the debt in violation of 1692 e 2 A. See http://caselaw.home.comcast.net/files/FREYERMUTH-v-CBS.pdf (also cites several other cases which held that the threat to take legal action on a time barred debt is a violation)



This letter as a whole violates the act generally (yes this is a legitimate legal claim under the act) because the letter as a whole is an attempt to mislead you as to what your rights and what their legal responsibilities are.

In review, this letter contains the following violations: each one is a separate and distinct violation.

1. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that since you have allegedly failed to previously dispute the debt, the Collection Agency now has no obligation to acknowledge or respond to your dispute. ("We have no record of returned mail sent to the current…”)
   
2. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that since you have allegedly failed to previously dispute the debt, the Collection Agency now has no obligation to acknowledge or respond to your dispute. ("We have no record of returned mail sent to the current…”)
   
3. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that a record of previous correspondence regarding this debt with other entities exists and they have possession of that record. ("We have no record of returned mail sent to the current…”)
   
4. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that a record of previous correspondence regarding this debt with other entities exists and they have possession of that record. ("We have no record of returned mail sent to the current…”)
   
5. 15 U.S.C. § 1692 e generally: making false and deceptive representation as to what a non-existent record contains. ("We have no record of returned mail sent to the current…”)
   
6. 15 U.S.C. § 1692 e 10: making false and deceptive representation as to what a non-existent record contains. ("We have no record of returned mail sent to the current…”)
   
7. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that the Fair Credit Billing Act applies to the current situation. ("The fair credit billing act requires…”)
   
8. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that the Fair Credit Billing Act applies to the current situation. ("The fair credit billing act requires…”)
   
9. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that by failing to assert your rights under the Fair Credit Billing Act you have waived your rights under Fair Debt Collection Practices Act. ("The fair credit billing act requires…”)
   
10. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that by failing to assert your rights under the Fair Credit Billing Act you have waived your rights under Fair Debt Collection Practices Act. ("The fair credit billing act requires…”)
    
11. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that you must “provide specific information in dispute under the Fair Debt Collection Practices Act” (Fair Credit Reporting Act reference) ("Fair Credit Reporting Act requires that information sufficient…”)
    
12. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that you must “provide specific information in dispute under the Fair Debt Collection Practices Act” (Fair Credit Reporting Act reference) ("Fair Credit Reporting Act requires that information sufficient…”)
    
13. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that any failure on your part under a different act (Fair Credit Reporting Act) excuses them from complying with the Fair Debt Collection Practices Act. (Fair Credit Reporting Act reference) ("Fair Credit Reporting Act requires that information sufficient…”)
    
14. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that any failure on your part under a different act (Fair Credit Reporting Act) excuses them from complying with the Fair Debt Collection Practices Act. (Fair Credit Reporting Act reference) ("Fair Credit Reporting Act requires that information sufficient…”)
    
15. 15 U.S.C. § 1692 e generally: Falsely and deceptively implies that the consumer include more than “I dispute this debt” (“This information should included the exact date…”)
    
16. 15 U.S.C. § 1692 e 10: Falsely and deceptively implies that the consumer include more than “I dispute this debt” (“This information should included the exact date…”)
    
17. 15 U.S.C. § 1692 e generally: Falsely and deceptively misnaming the law that governs debt collection. (“Additionally, the Fair Credit Collections Practices Act….”)
    
18. 15 U.S.C. § 1692 e 10: Falsely and deceptively misnaming the law that governs debt collection. (“Additionally, the Fair Credit Collections Practices Act….”)
    
19. 15 U.S.C. § 1692 f generally: Unfairly and unconscionably misnaming the law that governs debt collection. (“Additionally, the Fair Credit Collections Practices Act….”)
    
20. 15 U.S.C. § 1692 e generally: falsely and deceptively implying again that you must provide specific information. ("We have no record of your disputing the account balance…”)
    
21. 15 U.S.C. § 1692 e 10: falsely and deceptively implying again that you must provide specific information. ("We have no record of your disputing the account balance…”)
    
22. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that you failed to timely dispute. ("We have no record of your disputing the account balance…”)
    
23. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that you failed to timely dispute. ("We have no record of your disputing the account balance…”)
    
24. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that you must include specific information disputed. (“and your letter does not provide sufficient…”)
    
25. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that you must include specific information disputed. (“and your letter does not provide sufficient…”)
    
26. 15 U.S.C. § 1692 e generally: falsely and deceptively implying that this letter suffices as appropriate verification. ("we shall consider our provision of the information…”)
    
27. 15 U.S.C. § 1692 e 10: falsely and deceptively implying that this letter suffices as appropriate verification. ("we shall consider our provision of the information…”)
    
28. 15 U.S.C. § 1692 e generally: falsely and deceptively implies that you must dispute specific information (“"If you have information concerning a specific dispute….”)
    
29. 15 U.S.C. § 1692 e 10: falsely and deceptively implies that you must dispute specific information (“"If you have information concerning a specific dispute….”)
    
30. 15 U.S.C. § 1692 e generally: The letter as a whole attempt to mislead you as to what your rights are and their responsibilities are.
    
31. 15 U.S.C. § 1692 e 10: The letter as a whole attempt to mislead you as to what your rights are and their responsibilities are.
    
32. 15 U.S.C. § 1692 e generally: Falsely and deceptively implies again that you have not made a valid dispute. (“The unpaid balance will remain on our records…”)
    
33. 15 U.S.C. § 1692 e 5: Threatens to take an action which cannot be legally taken, they will continue to collect. (“The unpaid balance will remain on our records…”)
    
34. 15 U.S.C. § 1692 e 10: Falsely and deceptively implies again that you have not made a valid dispute. (“The unpaid balance will remain on our records…”)
    
35. 15 U.S.C. § 1692 g b: Failure to cease attempts to collect the debt until they have provided verification of the debt. (“The unpaid balance will remain on our records…”)
    
36. 15 U.S.C. § 1692 e generally: Again Falsely implies that you have not made a “valid” dispute. (“the account will continue to report as an unpaid charge off”)
    
37. 15 U.S.C. § 1692 e 5: Threatening to take an action which cannot legally be taken, failure to report as disputed. (“the account will continue to report as an unpaid charge off”)
    
38. 15 U.S.C. § 1692 e 5: Taking an action which cannot legally be taken, failure to report as disputed. (“the account will continue to report as an unpaid charge off”)
    
39. 15 U.S.C. § 1692 e 8: Threatening to communicate credit information which is known to be inaccurate, failure to note as disputed. (“the account will continue to report as an unpaid charge off”)
    
40. 15 U.S.C. § 1692 e 8: Failing to report this account as disputed by the consumer. (“the account will continue to report as an unpaid charge off”)
    
41. 15 U.S.C. § 1692 e 10: Again Falsely implies that you have not made a “valid” dispute. (“the account will continue to report as an unpaid charge off”)
    
42. 15 U.S.C. § 1692 e generally: Again, falsely implies that you have not made a “valid” dispute. (“Please be advised that we reserve the right….”)
    
43. 15 U.S.C. § 1692 e 5: Threatens to take an action which is not intended to be taken. (“Please be advised that we reserve the right….”)
    
44. 15 U.S.C. § 1692 e 10: Again, falsely implies that you have not made a “valid” dispute. (“Please be advised that we reserve the right….”)
    
    If the debt is time barred ….
    
    
45. 15 U.S.C. § 1692 e generally: Misrepresents the legal status of the debt. Threatens to sue on a time barred debt.
    
46. 15 U.S.C. § 1692 e 2 A: Misrepresents the legal status of the debt. Threatens to sue on a time barred debt.
    
47. 15 U.S.C. § 1692 e 10: Misrepresents the legal status of the debt. Threatens to sue on a time barred debt.