House Bill 1292 Fights Credit Card Blacklist Discrimination

American Express cheated him

For those of us who have ever been stung by the deceptive or outright harmful practices of credit card companies before, NewCreditRules.com’s Kevin Johnson is in our corner. As he shows us, personal loans are a much safer route for emergency funds than the old plastic.

Recently, he shared his insight on a bill that would prohibit the practice of “blacklisting” in Maryland. In fact, he even testified to the value of House Bill 1292: Consumer Protection – Blacklist Prevention before legislators in Washington, D.C.

Blacklisting is a discriminatory data-mining practice in which card companies decrease a customer’s line of credit because they decide that the establishments where customers are shopping with their card don’t meet standards of acceptability.

What?

It sounds ridiculous, but it happened to Johnson. He received a letter from American Express, explaining that they reduced his line of credit by almost 65 percent because “other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.” After checking thoroughly, Johnson found no item in his contract with American Express that stipulated they reserved the right to do such a thing.

The result of American Express’s action is that Johnson credit score dropped significantly. What was once an excellent score became fair. The spiderweb effect of that was that he no longer qualified for top interest rates, which in turn cost around $15,000 more on his 30-year fixed mortgage.

Nobody could explain it to him

Johnson asked for an explanation of this undocumented policy, but nobody at American Express seemed able or willing to help. Eventually, American Express did admit to the media that they use a customer’s spending habits to assess their creditworthiness. According to AMEX spokeswoman Kimberly Forde, “It is one of the many factors in our property risk model.

Later, however, AMEX spokeswoman Susan Korchak completely contradicted Forde when she sent Johnson a letter in which she denied that American Express was “looking at specific merchants.” Johnson believes the change in direction came on the heels of a $114 million settlement against CompuCredit by the Federal Trade Commission. CompuCredit was doing the same thing to their customers as American Express did to Johnson.

Fight discrimination

Johnson calls upon legislators to step up against such unfair discriminatory practices in ways that the federal government has failed to do thus far. Settlements, he argues, aren’t enough of a deterrent. He goes on to make a timely comparison to emphasize his point:

We cannot take the banks’ word that they intend to change their internal policies anymore than we can expect TARP recipients not to carelessly buy new private jets or expensive trash bins with tax payer money. We cannot believe a company, like American Express, that after 145 days, five months, has yet to restore my credit line and to apologize to me and others for being misleading about their policy.

House Bill 1292, said Johnson,  has the power to “protect Maryland consumers by sending a strong, clear, and legal deterrent that will stop blacklisting, and therefore set the model for the rest of the nation.” Transparency must happen now, if for no other reason than to being to repair consumer confidence. House Bill 1292 would be a big step in that direction.

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