Reports of Federal Reserve Board on credit card... - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Reports of Federal Reserve Board on credit card profiling

Reports of Federal Reserve Board on credit card profiling

Reports of Federal Reserve Board on credit card profiling

There have been at least two reports sent to the Congress by the Federal Reserve Board to address the issue of “behavioral profiling tactics” used by credit card companies. The companies use these methods to adjust the terms and conditions separately, and the Federal Reserve Board has taken up this matter with Congress. The Truth in Lending Act would be applicable to the credit card rules, and in turn, small business credit cards will only be known after awhile. There is basically a call for inaction as per the conclusions of this report.

Are card companies profiling customers?

The answer is yes. Card companies closely monitor transactions and behavior patterns of the customers, and keep track of the stores in which they shopped, the mortgage lender the customer approached etc. This information is used to readjust the terms on an individual basis.


There was a sample survey done on approximately 100 card issuers, as well as 75 other financial institutions in regards to credit card practices. It came as a shocking revelation when it was learnt that some issuers were calculating the terms based on the transactions with the mortgage lender, as well as other such details. While a few of these issuers stated that they only used this information in order to limit credit lines, there were those who actually raised the interest rates as well as some who closed accounts.


However, credit card issuers state that apart from setting the credit limits, this information is more general in nature, and does not delve into the details of the name of the retailer or merchant. For instance, there would be just a mention of “hardware store” and not the name of the specific store.


The report also suggests that putting a barrier on transaction specific information could prove costly, as it would make the fraud detection ineffective.

Would these restrictions be applicable to small business cards?

The amendment in the Truth and Lending Act has many provisions that could be applicable to credit cards. But these protections are not extended to small business cards, and the Board made observations on whether the same protection should be extended to small business cards too. The Board also observed that restricting the adjustments in interest rates by issuers might affect small businesses, as there would be an increase in interest rates as well as a decrease in credit limits.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Identity Fraud is Up

Posted: February 22, 2018

Last year identity fraud hit a record high, according to the 2018 Identity Fraud Study released by Javelin Strategy & Research. This brings the total number of identity fraud victims in the U.S. to 16.7 million, representing an 8% upswing. ... Continue reading
Traveling More and Taking Shorter Trips in 2018

Posted: February 21, 2018

Heading out for a quick getaway or extended trip to de-stress is trending with travelers, according to Visa's Global Travel Intentions (GTI) Study. They also discovered that taking shorter trips and traveling more often is in the cards for ... Continue reading
Travel and Dinning Out is Trending on Valentine’s Day

Posted: February 15, 2018

If you are planning to take your lover out for a night on the town or on a whirlwind trip for Valentine's Day, you are not alone. According to the new MasterCard Love Index findings, this type of emotion fueled spending is outpacing other ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit