Maloney: 5 Years Later, Credit CARD Act has saved consumers billions
WASHINGTON – Congresswoman Carolyn B. Maloney (D-NY) today released the following statement on the 5 year anniversary of the Credit Card Accountability, Responsibility, and Disclosure Act she authored being signed into law.
“When I authored the Credit CARD Act, I knew it would be one of the most important consumer protections in a generation, but I had no idea how incredibly successful and important it would be. The numbers range widely, but estimates show that this law has saved the American people anywhere from $63 billion to over $100 billion over the past 5 years.
“Perhaps no other set of protections has done more to help middle-class Americans get out from under the incredible burden of consumer debt. We stopped arbitrary interest rate increases, ended due date gimmicks and other abusive practices, improved transparency and ended predatory lending on college campuses.
“The Credit CARD Act was a tremendous accomplishment, but more work remains. We ended overlimit abuses for credit cards, but we have not yet addressed overdraft fee abuses on debit card purchases. That’s why I’ve introduced and am working to pass the Overdraft Protection Act.
“I also believe we must take a look at the growing use of prepaid cards, which are not subject to comprehensive federal regulations. I am hopeful that my colleagues in Congress will work with me to build on the great success of the Credit CARD Act with additional protections.”
On May 22, 2009, President Barack Obama signed into law landmark credit card reform legislation that authored by Maloney. This legislation, Public Law 111-24, ended the most abusive practices of the credit card industry and level the playing field between cardholders and credit card companies. The comprehensive credit card reform bill, takes a balanced approach to reforming major industry abuses and improving consumer protections for cardholders. Among the bill’s protections, it:
- Protects cardholders against retroactive interest rate increases on existing balances
- Protects cardholders from due date gimmicks
- Shields cardholders from misleading terms
- Empowers cardholders to set limits on their credit
- Protects vulnerable consumers from fee-heavy subprime cards
- Requires Congress to provide better oversight of the credit card industry
Maloney introduced the Overdraft Protection Act in 2012 and reintroduced the legislation in March of 2013. The bill:
- Requires consumer consent before financial institutions can permit overdraft fees to paper checks, automated clearinghouse (ACH) charges and debit card swipe-terminal transactions on consumer accounts, and defines overdraft fees as finance charges subject to the Truth in Lending Act disclosures. Current Federal Reserve rules require opt-in to overdraft fees only for debit card transactions.
- Prohibits financial institutions from manipulating the sequence in which checks and other debits are posted if it causes more overdrafts and maximizes fees paid to financial institutions.
- Requires that fees be 'reasonable and proportional' to the amount of the overdraft.
- Caps the number of fees that can be charged at one per month and six per year.
- Enhances disclosures to consumers both at the point of opt-in (disclosing alternatives to overdraft protection, including linked accounts or lines of credit) and when an overdraft fee is charged (if consumers choose to opt in).
- Requires the Consumer Finance Protection Bureau to study prepaid debit card overdraft fees and grants rulemaking authority over those fees to CFPB.