A lawsuit filed last week in the First Circuit court of Hawaii charges seven companies – Bank of America, Barclays, Capital One, Chase, Citi, Discover, HSBC, as well as their subsidiaries, with signing customers up for consumer protection plans that they never asked for, and in some cases didn`t even qualify for.
These plans are marketed toward credit card holders as insurance against fraud due to lost or stolen cards or identity theft, as well as a stopgap measure to protect them in the event that unexpected disability or unemployment leaves them unable to make minimum payments on their accounts. The programs would halt new charges, lessen interest fees, or otherwise provide protection for card holders who find themselves in one of those predicaments.
Slamming Schemes Slap Seniors and Seasonal Workers
The problem is that, according to the attorneys involved in the Hawaiian suit, certain customers who aren`t eligible for these programs – such as retirees, part-time or seasonal workers, the self-employed, or people on a fixed income of any sort – were enrolled in the programs anyway. The practice of enrolling customers into programs without their consent is known as “slamming” and often is done by getting customers to agree to receive information about a product, then signing them up instead of simply sending information.
People who have been enrolled in these payment protection programs with their knowledge or consent, and who may or may not even be qualified to receive them, probably do not notice the small extra charge on their credit card bill each month. The charges are usually under $10 per month so particularly for someone carrying a large balance, the fee could easily go unnoticed.
Staying Safe and Secure
Consumers may be well aware of the things they should do to protect themselves from fraudulent charges and compromising their personal information, but because their credit card company already has their information, it`s easy for them to sign their own customers up for programs that they neither need nor want. All they have to do is make a sales call and get the customer to agree to hear more about a program. The Hawaii lawsuit takes aim at these predatory practices, hoping to put an end to them.
State Attorney General David Louie urged consumers to “Be careful, be aware and go scrutinize your credit card bills. You may not notice there`s these little charges, but those little charges can add up.”
Crime and Punishment
Honolulu attorney Rick Fried, in association with Philadelphia firm Golomb and Honik, and Dallas firm Baron and Budd, will be representing the state in the lawsuit. Fried said this week that about 110,000 Hawaiian credit cards (about 4 percent of all credit cards in the state) are signed up for protection plans, with an average charge per card of $150.
Fried estimates that “the potential claim here is in the millions of dollars, because the penalty is based on our statute, or the Unfair and Deceptive Trade Practices Act, which provides penalties from $500 to $10,000 per violation.”
As the lawsuit progresses, Credit-Land.com will keep abreast of new developments and continue to update the story. As a reminder, you can always visit our extensive archive of educational articles about credit card security and protection to make sure you aren`t the unwitting victim of schemes like slamming or other types of fraud.