Protect Consumers from Predatory Credit Cards

An Everett Herald AP article in December 2008 explained new credit card rules adopted by federal regulators to protect consumers against predatory practices. One reader took issue with the government stepping in to protect consumers. A consumer ought to know what terms he has agreed to and not complain if he accepts those terms. Here is what I wrote:

The issue isn’t whether consumers are aware of the terms of the contract. Yes, of course they should be to prevent a personal loss of money. Rather the problem is with the nature of the deal itself. Consumers are not on a level playing field with the large banks and service companies. Consumers must accept the terms that are offered or go elsewhere – except that the other players offer the same terms so there is nowhere else to go. The individual consumer is disadvantaged in participating in society in a major way. No credit card? Then, try reserving a hotel room or a car or booking a flight.

We would not accept predatory “gotcha” terms in our dealings with government. We would insist that government exists to serve the people and in fact the way government works often does change when different elected officials take office.

But, you might say, business doesn’t owe a duty to the people like government does -- it’s duty is to it’s owners or stockholders. Well, that question actually is a matter of public policy. There is a long history of government regulating business in recognition of the fact that laissez-faire capitalism soon enough evolves into exploitation and impoverishment of the many for the benefit of the wealthy – not to mention distrust in the market place which leads to inefficiencies in the economy. And, in fact, business does owe a duty to the people who make their profits possible – the employees without whose work the business would not exist and the customers whose willingness to buy makes the sale happen. In each case there is a responsibility beyond the mere exchange of work or product for currency. There is a responsibility to treat the other party with the respect that benefits a fellow human. And, what those standards are is a matter of public policy.

In the last 8 years of the Bush administration, those standards have been hacked away at or just plain ignored by people who hold the power in government and business. Today, it is glaringly apparent that banks owe a duty to the public – as they appeal to the public treasury with hat in hand to the tune of $700 billion dollars and counting! And yet, true to their nature, they won’t even tell the people how they are using that money they’ve been lent -- whether it is used to help with the mortgage crisis, to pay executive salaries and bonuses or as an opportunity to buy other businesses.

While we lowly consumers are relegated to arguing over whether it’s fair for the bank to assess a late payment when the check arrives after noon on the due date, the executive officers of these financial institutions must be laughing while they rake in millions in late fees and taxpayer dollars to bail them out of their poor or downright criminal decisions.