(Washington, DC) - U.S. Rep. Gary Ackerman (D-Queens/L.I.), senior member of the House Financial Services Committee, today made the following opening statement during a hearing held by the panel’s Financial Institutions and Consumer Credit Subcommittee. The hearing was entitled “Improving Credit Card Consumer Protection: Recent Industry and Regulatory Initiatives.”

 “Consumers, credit card issuers, regulators, and certainly the Members of this Subcommittee, should all agree that the Federal Reserve Board’s recent proposed rule changes to Regulation Z are long overdue. Presenting potential credit card customers with easy-to-read, clear and understandable disclosure statements that plainly summarize the terms, fees and interest rates that come with a particular card is more than just a good idea – it’s a good idea that should have been implemented a long time ago, and without the necessity of federal involvement. Such a requirement is not only ridiculously obvious, it is profitable. Informed consumers are not only happier people, they are better long-term customers.

 Over the past 15 years, credit card issuers have increased the number of solicitations sent to consumers by more than 500%. Consumer protections have sadly not kept pace. When finalized, the proposed changes to Regulation Z will allow millions of Americans to put away their magnifying glasses, legal dictionaries and crystal balls, when combing through the piles of credit card offers they receive every month. Unfortunately, however, they will still need their life jackets and umbrellas to keep from getting soaked by some of the more sinister credit-industry practices that have sadly become commonplace.

 Perhaps the most infamous of these practices is universal default, a practice that substantially increases a consumer’s annual interest rate because just once they forgot, or failed to pay, any other creditor on time. There is also double-cycle billing, a system under which a card-issuer assesses interest retroactively on debts that may be partially, or almost completely paid off.  Then, of course, there are so-called “pay to pay” fees, under which a credit card customer is charged a fee simply for the opportunity to pay their bill – deliberately sent late in the month – online or by phone. Each of these practices are legal. None of them are fair. None of them are necessary. There is no question that the consumer credit industry is critical to our to our economy, and that credit cards have been a boon to millions of American households. But the protection of consumers is not the credit card industry's job; it's ours, and past time for consumer interests to get a boost.

 As a small contribution to this rebalancing of interests, I have already introduced legislation to address the pay-to-pay problem. I am looking forward to hearing from our witnesses about industry plans to correct some of these and other egregious practices. It is my hope that they will be able to tell us about their plans to pursue more responsible, more consumer-friendly business practices and how quickly they plan on doing so.

 But I'm not about to give up my crystal ball just yet.”

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