Credit card companies make dumb mistakes
We tend to have a love/hate relationship when it comes to our credit card companies. We love them when they're allowing us to buy things when we want to, and when they're providing us with unrivalled consumer protections against criminals and shysters.
We hate them when they close our accounts, reduce our credit limits, or generally play deaf when we have a legitimate complaint. Some of us also think they're dumb when they lend money to subprime borrowers just a few short years after the last time they tried that -- and ended up burning their (and our) fingers so badly.
Sure, no business is perfect. After all, companies are run by humans (err, well, we think.) But some headlines recently have us wondering, "How dumb can they be?"
We're not sure we want to answer that.
Within three months of each other, three major credit card companies, Capital One, Discover and American Express have all been fined by the Consumer Financial Protection Bureau for use of deceptive marketing tactics or violating consumer protection laws. The total amount of fines and refunds between them: $425 million.
Capital One and Discover's mistake was in its deceptive selling of "add-on" products and services, such as credit monitoring and payment protection. American Express is fined, according to the CFPB website, for illegal practices involving signup offers, late fees and debt resolution.
Is it safe to assume that American Express won't be the last company in trouble for these tactics?
Private Eye, a biweekly satirical magazine published in London, England, carries a regular feature under the heading, "Stupid Letter of the Week." And its Sept. 7 edition included this direct-mail gem from Tesco, Britiain's biggest supermarket company and also an issuer of credit cards:
EXAMPLE OF HOW MUCH YOU MIGHT HAVE TO PAY:
If you make a purchase of £1,200 and interest is charged at the standard rate for purchases and you repay it in 12 equal monthly payments, each made on time, the total amount payable will be £XXXX.XX and the APR XX.X% (variable).
Oh come on, you're saying. This is obviously just a human error, and some poor sap in Tesco's marketing department is still today being teased for the simple mistake of forgetting to change the Xs into figures before the direct marketing letter was printed.
But no. There's a footnote to the letter that makes it clear that the Xs were included deliberately. It says: "It's just to give you an indication of how much you might have to pay to help you compare credit cards. We've used XX's here in place of some figures as these will depend on your personal interest rates."
As Private Eye observed: "How helpful!"