Credit Card News
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many 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

By
Add to Favorites:
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.

Add to Favorites:

Related News:

Best Buy Gets Chase Pay

By Dar Dowling, Posted: September 30, 2016

Best Buy carries everything from smartphones and TVs to computers and cameras – and now people who shop with them will be able to use Chase Pay when shopping online. Continue reading
Financial Optimism is Up, But So is Income Stress

By Dar Dowling, Posted: September 29, 2016

Are you feeling more hopeful, yet are still a bit worried about whether or not you're making enough money? Continue reading
MasterCard Send Makes a Splash

By Dar Dowling, Posted: September 28, 2016

MasterCard and Stripe have teamed up so that U.S. sellers using Stripe marketplaces, like Postmates, Instacart and iCracked, can opt to make instant payouts via the Stripe interface, using MasterCard Send. Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Get 0% Intro APR on Balance Transfers and Purchases for 21 months. After that, the APR will be 12.24%-22.24% based upon your creditworthiness.
For Excellent/Good Credit
1% cash back on select purchases, terms apply
For Fair Credit
Guaranteed $500 Unsecured Credit Limit
For Bad Credit