WILMINGTON, DE - Consumer groups opposed to the proposed merger of MBNA and Bank of America appeared today at a hearing called by the Delaware State Bank Commissioner. Representatives from the Delaware Community Reinvestment Action Council (DCRAC) and the Community Reinvestment Association of North Carolina (CRA-NC) both spoke against the merger.
"This merger proposal is anti-competitive, and both companies have a track record of lending practices that harm consumers," said Rashmi Rangan, executive director of DCRAC. "There are numerous reasons why this merger should be denied."
CRA-NC, based in Bank of America's home state, issued a Consumer Bill of Rights for Credit Cards on behalf of the combined companies' 40 million active card holders. "We hold this truth to be self-evident - consumers have the right to fairness in lending," said Peter Skillern, executive director of CRA-NC. "To guarantee a fair balance of power between borrowers and giant lenders like MBNA and Bank of America, consumers deserve a bill of rights for credit cards."
http://www.cra-nc.org/billofrights.htm
The Consumer Bill of Rights for Credit Cards is a set of standards for credit cards issued in the United States. It consists of ten rights, including consumer protections against excessive fees, arbitrary changes by card companies to previously-agreed terms and conditions, and rate increases on existing balances. It calls for fair billing procedures that give the benefit of the doubt to consumers by accepting postmark due dates, and consistent billing cycles, preferably 30 days.
"If you're on a 20-day billing cycle, but pay all your bills once a month, you're being set up for late fees," said Skillern. "Consumers should have the right to honest billing from credit card lenders, not deceptive tactics."
During his remarks, Skillern also released a new report from CRA-NC that gave both MBNA and Bank of America poor marks on their credit card lending practices. "Stacking Up The Cards" looks at fees, billing practices, and policies that govern credit cards issued by both companies, and measures them against the standards of the Consumer Bill of Rights for Credit Cards.
"Consumers deserve better," said Skillern. "The credit card industry, and especially lending giants like MBNA and Bank America, must implement real reforms that safeguard fair lending standards for consumers. This is an opportunity for both companies to do the right thing. The Consumer Bill of Rights for Credit Cards is a blueprint for change in the right direction."
The full Consumer Bills of Rights for Credit Cards is listed below. CRA-NC's report "Stacking Up The Cards: How MBNA and Bank of America Measure Up to the Consumer Bill of Rights for Credit Cards" is available from CRA-NC at
http://www.cra-nc.org/stackingupthecards.htm.
Consumer Bill of Rights for Credit Cards
- Credit card companies may not unilaterally change the price, terms and conditions during the credit card agreement period. Revised pricing is prohibited and consumers are protected from rate increases on existing balances for any reason.
- Accounting should be straightforward and fair to the consumer.
- Credit card underwriting must consider the borrower's ability to repay.
- Binding arbitration is a violation of consumers' rights to due process and is prohibited.
- Fees must relate to the cost of providing credit services.
- Interest rates may be priced according to risk, but must be conscionable.
- Billing procedures must be fair with the benefit of doubt given to the consumer, i.e., accept the postmarked date as proof of on-time payments with no arbitrary cutoff time on the due date. The billing cycle must be consistent and preferably 30 days.
- Minimum balance payments must be sufficient to reduce the principle and an explanation should be provided of how long and at what cost repayment of the existing balance will take if no further charges are made.
- If the company approves charges above the credit limit, then an over limit penalty may not be charged without first granting the borrower an opportunity to lower the balance.
- Consumers have a right to clear, simple and understandable explanation on the full cost, terms and conditions for credit cards.
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About the Community Reinvestment Association of North Carolina (CRA-NC)
The Community Reinvestment Association of North Carolina's mission is to promote and protect community wealth. Committed to creative advocacy, CRA-NC uses research, education, mobilization, media, litigation, regulatory challenges, legislative advocacy and stockholder actions to initiate change. Join the fight for economic justice!
CRA-NC www.cra-nc.org (919) 667-1557 114 W. Parrish St, Durham NC 27701