Interchange dodges a bullet

Efforts by the Merchants Payments Coalition to force a congressional debate over interchange were shot down this week when a proposed amendment to the Credit Cardholders' Bill of Rights Act (HR 627) was ruled nongermane.

The bill, which mirrors legislation that passed in the U.S. House of Representatives last year but not in the Senate, was approved in the House on April 30, 2009, by an overwhelming majority: 357 to 70.

Merchants, operating through the MPC, took their complaints about interchange to Congress and convinced several members of the House to push for amendments that would rein in interchange.

However, the National Association of Convenience Stores reported that efforts to introduce an interchange amendment were struck down April 29 by the House Parliamentarian, who ruled the amendment was not relevant to the overall intent of HR 627.

Consumer protection a priority

Introduced by Rep. Carolyn Maloney, D-N.Y., and co-sponsored by 128 Democrats and Republicans, HR 627 aims to protect consumers against misleading and often incomprehensible card contract terms. It also places restrictions on issuer fees and rate setting.

Several amendments deemed pertinent were approved during House debate on the measure. These included provisions for military personnel and disabled veterans who miss payments, underwriting requirements for student card accounts, promotional rates, and minimum payments.

"[T]he House sent a message to the American public that responsible regulation is part of the new era of financial responsibility – and that responsibility works both ways, for companies as well as consumers," Maloney said.

Rep. Luis Gutierrez, Chairman of the Subcommittee on Financial Institutions and Consumer Credit, pointed out that the average family owes roughly $8,000 on credit cards. "Meanwhile, as Americans struggle to make ends meet, a growing share of the industry's revenues come from deceptive tactics, such as universal default terms spelled out in fine print – the terms and conditions of which can be changed at any time for any reason with 15 days' notice or less," Gutierrez said. "The Credit Cardholders' Bill of Rights responds by applying common-sense regulations that reward hard work and responsibility rather than high-flying finance schemes," he added.

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