Doctors push medical credit cards, spark investigations

Imagine this unsettling scene.  You lie in the emergency room of a hospital.  After being hit by a drunk driver, you are critically injured. Barely conscious and in tremendous pain, you find out that your insurance company will cover only some of the costs of your vital surgery.  Realizing the gap of coverage and your inability to pay for it, your doctor pulls out a credit card application and says, “Don’t worry. We offer this great medical credit card that is interest free.  Just sign here on the dotted line, and we’ll get you put back together in no time.” As you sign the agreement, your doctor smiles, elated that he gets some payment upfront and that he gets a kickback from the creditor.  

This scenario dramatizes a growing problem: doctors pushing medical credit cards. In fact, the number of complaints about doctors promoting medical credit cards has risen in recent months.  Some of the complaints are so outrageous that they have sparked the ire of New York Attorney General Andrew M. Cuomo, who recently announced an investigation into the health-care lending industry. Other state attorneys are pursuing rogue doctors who take advantage of patients, many of which are not fully aware of the credit card terms.

Loopholes of the Credit CARD Act

ABC News takes a look at some of the loopholes of the Credit CARD Act. Read more details in the written article.

Debt collectors resort to racist and terroristic threats

I have a family member who works in collections. She is pretty good at it, too. She tells me that given the economic downturn and new credit card laws, it has become increasingly difficult for her and her colleagues to meet their quotas. Collectors that do not meet their goals are fired.  Ironically, many of the ex-collectors themselves will end up in arrears and experience the same unyielding collection tactics they administered.   

I am not insinuating that you should have any sympathy for debt collectors. However, I am attempting to explain possibly why collectors are going to extreme measures to collect debts, even debts as small as a few hundred dollars. In the same way that debtors are under extreme pressure to pay their bills, collectors are under extreme pressure to collect debts.  

Below are two of the most outrageous cases of debt collectors resorting to appalling tactics that obviously violate the law—and both stories broke within the past two months. 

• Vulgar voicemails force debt collector to pay $1.5 million
• Verizon Wireless Bill Collector Allegedly Threatens to Blow Up Man's House

Visa misleads customers. Compliance is not “courtesy”.

 

About a month ago I received a letter from Visa, informing me that it will be canceling my credit card account. As I normally do when I get such bad news from a creditor, I put down the letter and let my nerves cool for a few hours.  This was especially bad news because of two problems: 1) This account, opened in college, was the oldest account on my record. Thus, closing it will have a major effect on my credit score.  2) I will no longer have access to personal credit.  (I still have my American Express card open, but I have avoided using it altogether because of the company’s insidious policies.)

After cooling down, I realized that this can turn out to be a good thing.  More than ever, I will be forced to maintain positive cash flow, which I have.  So, I decided to pay the outstanding balance of $2,569.85 in full and to close the account on my own terms.  (I wanted to make sure that my credit report shows that I closed the account, not the creditor. Also, I looked forward to the added satisfaction of sticking it to Visa first.) 

Right before I paid off and closed the account, the customer service representative says, “As a courtesy, I will waive the $14.95 fee for expedited payment via the phone.” I almost had a fit. According to the new Credit CARD Act, companies can no longer charge such a convenience fee.  I stayed quiet, fuming smoke through my ears and nose.  I was not in the mood to inform the representative of the law. I was most eager to pay the account off, close it, hang up, and blog about the experience. 

In short, I share this because it shows the continued skulduggery of some credit card companies which have not learned their lesson.  The more things change, the more they stay same the same.

Capital One the latest to report business debt to personal credit bureaus

Some people dread going to the dentist.  Others dread speaking in public. I dread getting my credit report. 

This fear exists not because I have bad credit, but because I know that as a business owner, I am vulnerable to the reprisals of credit card companies which, in response to the passage of the Credit CARD Act, have begun to take out their frustrations on small businesses.  Because credit cards issued to businesses are not covered under the new act, business owners are sitting ducks.

I checked my credit report a few days ago.  Everything was prefect except one thing:  One of my business creditors, Capital One, began reporting my business credit to all three personal credit bureaus in October 2009.  In other words, no longer are my personal debt and business debt separate.  My worst nightmare came true.

Credit unions no longer a safe haven?

In this ever-changing and tumultuous world of consumer credit, no borrowers are completely safe from the whims of frantic lenders--even the so-called safe ones. Often considered the best option for consumer loans, credit unions are becoming more like their rogue cousins: commercial banks. 

Based on recent e-mails and comments sent to me from frustrated consumers, credit unions are beginning to adopt and to implement changes to their credit card accounts, including increased interest rates and stricter terms.  This comes as a surprise given that amid the widespread outrage against commercial banks, credit unions have been touted as the safe alternative.   

One such customer wrote me:

Chase to jettison small business lines in March

When a ship is sinking, its crew members are last to disembark regardless of who or what is to blame for the disaster.  In other words, passengers are at the top of the hierarchy during a maritime triage. If our financial system were a huge ship about to go under, this moral convention would be turned upside down: Ruthless banks would rush to secure lifeboats for themselves, knocking over consumers and small businesses and leaving behind everyone to fend for themselves.    

Among the many casualties on this boat would be small businesses, the most important sector of our gigantic economy.  (Over the last decade, small businesses have generated 60 to 80 percent of net new jobs in the country.)  Despite the catastrophic effects of the financial crisis and credit crunch on these businesses, the government has been slow to offer much substantive help.  On the contrary, the swift passage of the Credit CARD Act of 2009 gave consumers, not businesses, life jackets and a better chance to survive the cold, oceanic currents. 

For whatever reason, small businesses have been overlooked when it comes to receiving protection against the whims of banks looking to curb their losses.  Perhaps it is because small businesses don’t vote. Or maybe it is because they are a major risk.  As a result of this vulnerability, banks have been changing rapidly their credit terms for small businesses by reducing credit limits, eliminating access to lines of credit, and raising minimum payments twofold. (I wrote about American Express doing this about a year ago.) 

Most recently, Chase sent me a letter, outlining new adverse terms for its business lines of credit.  The changes will go into effect on Mar. 31.  My business line of credit originated with Washington Mutual, which was acquired by Chase during the height of the financial crisis. As a Texan might say: “This ain’t my first rodeo”. I had a premonition that any notification around this time was likely to be bad news.  I read the cryptic letter like an attorney from Harvard Law School.

Here are the morbid highlights:

Capital One raises my interest rate seven percentage points

The party is over: The reprisals of credit card companies have begun, as if on cue the moment the Senate made increased regulation a reality. 

On Friday, the same day President Obama signed the Credit CARD Act into law, I received correspondence from Capital One notifying me that my interest rate will increase, effective for all billing periods after Jul. 2, 2009.  Simply put, the rate on my business platinum account will rise from a reasonable 15.9 percent to 22.9 percent—a 44 percent increase in the rate. I am afraid to ask what the penalty rate would be.  Thirty-five percent?

American Express “eliminating interest-free grace periods”

An American Express Costco Card customer, who says that she has never carried a balance, alleges that American Express is “eliminating interest-free grace periods”.  In other words, the company is now applying finance charges to fully-paid balances within the grace period.

Small businesses devastated by the credit crunch

Yesterday, I received a call from a good friend of mine who is president of a chamber of commerce.  Also on the call was a successful, small business owner who I have never met.  (Let’s name him Chris for convenience.)  They called to inform me of yet another horror story that involved American Express, but this story was a little different because I normally hear about consumer credit horror stories, not business horror stories.

In a nutshell, Chris, whose company is doing well and was offered the American Express Black Card at one point, had his credit line reduced tremendously.  Unfortunately, there was no warning.  He found out while on a business trip in Germany when his card was declined.    I listened to his story, told him what I know about the changing industry, and gave him some advice.

Recently, an article appeared in The Wall Street Journal detailing similar stories.  The credit crunch is hitting small businesses the hardest, causing the rate of business bankruptcy filings to outpace consumer bankruptcy filings over the past 12 to 15 months. 

American Express decommissions business line of credit products without adequate notice

[ View Notification Letter ]

Much to the inconvenience and continued frustration of its customers, American Express recently announced that it is decommissioning two major products: the Business Line of Credit and Business Capital Line Program.  Both products will no longer exist beginning January 15, 2009. 

In untimely letters to its customers, American Express cites the reason as increasing focus on its core set of products. Afterwards, the letter proceeds to outline new terms for all accounts. 

Devastating effects on small businesses

As mentioned in previous posts, American Express has notified customers of their abrupt changes in the worst way.