OCC Responds

I finally got a response from the OCC on my complaint about MBNA. If you remember, it was about reviewing the contract before applying for an account. Apparently banks and credit cards don't have to tell you what you are promising them until you are obligated.

Here is the text of the letter:
“The Office of the Comptroller of the Currency (OCC) is responding to your letter regarding the above-mentioned bank. The focus of the OCC’s review of consumer complaints against national banks is to determine whether the bank’s actions are consistent with banking statutes, regulations or any policies that are applicable to nationally chartered banking institutions.

In your correspondence with this agency, you expressed your concern regarding the delivery of the card agreement for a credit card account. You feel the card agreement should be provided before the application is completed, instead of after the application has been completed.

The OCC contacted the bank, which responded to us regarding your concerns. The bank contacted you by phone to discuss your concerns. The bank advised you that the card agreement is specific to the approved application and is mailed to the consumer with the credit card. The bank confirmed that all rates, fees, and other costs and provisions are disclosed in the card agreement.

Regulation Z, the Truth In Lending Act, does not require the bank to provide the disclosures prior to the application process. However, the act does require that the bank disclose the terms, fees, and charges associated with the account once established.

The Customer Assistance Group’s consumer complaint process is a service that is provided to customers of national banks. Information provided within this letter is specifically related to an individual consumer complaint and should not be construed as either a legal opinion of the OCC or a supervisory action. If you are not satisfied with the resolution of your complaint, you may wish to consult legal counsel so as to preserve your rights.”

This letter was dated August 9, 2005. I had previously written Dianne Feinstein about my complaint and that I hadn't received a response. Her letter to me was dated July 18, 2005.

“Thank you for contacting me to express your concerns about MBNA and the Truth In Lending Act (TILA). I appreciate the time you took to write and welcome the opportunity to respond.

Like you, I am very concerned that some credit card companies are using deceptive tactics that push consumers into debt. This is especially relevant with regard to solicitations and I cannot stress enough how critical it is for credit card companies to abide by existing regulations like the TILA and the Federal Reserve Board’s Regulation Z. As you know, these safeguards are in place to ensure the “clear and conspicuous” disclosure of certain terms of credit card agreements – including annual percentage rates (APR) – in solicitations to open a credit card account. Furthermore, I find misleading tactics particularly troubling because credit card solicitations are growing fastest among consumers with the lowest incomes.

Research done by my staff shows that many credit card issuers fail to screen their clients, thus credit cards are being offered to people who are unable to afford them. In addition, inadequate information is provided to new users of credit cards on how to manage their credit. In part for these reasons, I have introduced the Credit Card Minimum Payment Notification Act (S.1040). My bill would require creditors to disclose the amount of time and amount of money that it would take to pay off a credit card balance if only the minimum payment is made. I believe the consumer has the right to know the long term impacts and details of their credit card debt.

Again, thank you for your letter. Please know that my staff will follow this issue closely and I will be sure to keep your concerns in mind should legislation related to credit card payments come to the Senate floor.”

While I applaud her efforts. I still think it is too little. All I am asking for is to see a contract before I sign it. It seems banks and credit card companies aren't required to treat people fairly. The Truth In Lending Act (TILA) and Regulation Z are simply regulations that protect banks more than they protect consumers. TILA is a substitute for a contract, and credit card companies bait and switch by sending you a new agreement in the mail, after you have given them your private information and added an account to your credit report. You have also waived constitutional rights and given the credit card company the ability to put you into financial slavery with the flick of a pen - but you don't know that because you don't understand your agreement, nor have you even read it.