You Lie: Bank of America’s Claim It Will Not Raise Credit Card Interest Rates Outright Deception

In all of the years I have reported on consumer issues, I’ve dealt with my share of deceptive press releases and public relations campaigns from companies trying to do damage control or fight a policy battle on Capitol Hill.  But not since tobacco CEO’s appeared before Congress to testify they didn’t believe nicotine-laced tobacco products were addictive, have I encountered a company that so disingenuously engages in outright, naked deception.

In its campaign to protect itself from regulatory measures to reign in an industry gone wild, Bank of America Monday wrote a letter to Sen. Chris Dodd (D-Conn.) informing him the company would not raise its credit card interest rates on customers unless they made late payments.  The Washington Post this morning reported:

Bank of America said it will not raise credit card interest rates before February, when a law restricting industry practices takes effect, unless a cardholder is in default.

In a letter sent to Sen. Christopher J. Dodd (D-Conn.) on Monday, John Collingwood, the bank’s director of federal government relations, wrote that the bank was making the change “in light of the concerns expressed to us by our customers.”

I was unimpressed by the coverage by the Post, who didn’t bother to ask actual cardholders what they thought — reporter Nancy Trejos would have quickly learned that millions of Bank of America credit card customers were already victimized by unwarranted interest rate hikes the bank implemented over this past summer, after notifying customers of the changes back in April.  This reporter is one of those customers.

In my case, I came out better than some.  A Bank of America credit card I hold that carried a fixed interest rate of 7.99% for at least the past four years was converted into a variable interest rate (which virtually every bank is doing to escape the credit card reform regulation requirement that limits their ability to hike rates on consumers — variable rates allow them to continue to change interest rates monthly), but also increased to around 12%.  Many customers reported much higher increases, some now confronting rates exceeding 20%.  You could have had a pristine payment record and your rate still increased.

Bank of America explained in their letter the rate change was due to a changing business environment.

Bank of America’s claim they are responding to the concerns of its customers is also amusing, at best.  Bank of America has yet to demonstrate much concern for their customers, who contacted the company en masse back during the spring round of rate hikes asking them to reverse their decision, particularly when the customer has never made a late payment and maintains an excellent credit score.  The company routinely told customers, “no.”  Your only option was to “opt-out,” which works only if you treat your credit line as closed, and are prepared for the hit to your credit score when they close your account upon achieving a zero balance.

That intransigence remarkably eases not when customers call, complain, or even cancel their accounts.  It changes when Congress threatens to make further regulatory changes to the credit card industry in response to their ongoing customer abuses.

A change represented in a letter to Senator Dodd is just a piece of paper.  For millions of consumers just like myself, where is our letter from Bank of America apologizing for the naked profit grab, refunding the difference in interest changes many millions of Americans have been subjected to since Bank of America’s interest rate hikes, and a restoration of our former, fixed, interest rate?

Call your member of Congress and two senators and inform them Bank of America is engaged in outright deception if they think a letter to Senator Dodd is proof enough that they are actually changing course.  Until the company publicly states they are restoring the interest rates of all Bank of America customers without a late payment history to the interest rate they paid in January 2009, they have a lot of explaining to do.

Credit card reform legislation has not provided consumers with actual relief.  The legislation provided enough loopholes, and a lengthy delay before full implementation, to allow the credit card industry to pelt consumers with an endless series of “changes in terms” letters from credit card companies increasing rates, decreasing credit lines, closing accounts, increasing the minimum payment requirements, and a whole parade of other changes that are so punishing, they are tipping consumers over the edge into insolvency.

Until Congress supports the Obama Administration’s idea of a federal consumer protection agency that has the flexibility to outmaneuver and ban anti-consumer tricks and traps unintentionally allowed by federal law, Americans will continue to be victimized by cat and mouse games by the credit card industry.

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