Sunday, March 7, 2010

Credit Card Robbery

Both Karl Denninger of Market Ticker and Yves Smith of naked capitalist have commented on the new credit card user agreements that have been sent out in preparation for the new credit card law, which Citigroup wrote for the Administration, which has just recently taken effect.  We have previously commented on several areas which will bear watching and will undoubtedly have negative effects on consumers.  We commented on the radio show yesterday about the comments of Smith and Denninger, but it is serious enough that it deserves its own post rather than being lumped in with the Leftovers.

Using the JP Morgan Chase new user agreement as an example, both Smith and Denninger exposed the wording that would allow the bank to demand immediate and full payment of the credit card balance if they have any reason to "believe" the account holder may be unwilling or unable to pay as the result of "information" they may receive without regard to your account being current and no payments late or missed.  Universal default was to be illegal, but the banks have used legal language to circumvent the prohibition and make make a "maybe if" rather than a specific act reason for immediate and full payment.  This is not just a continuation of complex contract abuse; it is a direct threat to human liberty and due process.

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