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FUCAN, the San Diego based Utilities
Consumer Action Network (www.ucan.org)
filed suit in California's Superior Court this week
against Discover Card, citing the use of a universal
default clause in Discovers card agreements and the
inclusion of such a clause to all existing accounts with a
small notice sent with the monthly statements. The
Universal default clause, which is hidden in most credit
agreements under a note about defaults, is: "Your APRs may
increase if you default under any Card member Agreement
you have with us for any of the following reasons: we do
not receive at least the minimum payment due by the date
and time due as shown on your billing statement for any
billing cycle for which a payment is owed, you exceed your
credit line on this Account, you fail to make payment to
another creditor when due, you make a
payment to us that is not honored by your bank."
Here is some of the UCAN story: “ Imagine opening your
credit card bill and learning that you are
no longer paying 3.9% interest -- as promised in the
original the promotional deal. Instead, the rate has been
jacked up to 19%. Put in dollar terms -- a customer with a
monthly payment of $33 on a $10,000 balance,
would now be forced to pay $158 each month. Whoa there!
What happened?
Here's what happened: Discover exercised its right to jack
up that customer's interest rates because the card issuer
"discovered" that the customer had been late in paying a
phone bill. Never mind that it was a contested phone bill
that the customer believed was in error and was
protesting. Discover didn't care -- this little known
clause that was hidden in an innocuous "addendum" mailed
to that customer just months before gave Discover the
right to modify the interest rate or even cancel the
account and demand full payment if that customer had a
late payment to ANY OTHER CREDITOR.” ICFE does not accept
Discover Card in its online bookstore.
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About the ICFE:
About the
ICFE:
The Institute of Consumer Financial Education (ICFE), founded in 1982 by the
late Loren Dunton (creator of the “certified financial planner” (CFP)
designation) and it is dedicated to helping consumers of all ages to improve
their spending, increase savings and use credit more wisely. The ICFE trains and
certifies Personal Finance Instructors for its own curriculum. It also trains
and certifies Credit Report Reviewers and Identity Theft Prevention Specialists.
The ICFE is an award winning, nonprofit, consumer education organization that
has helped millions of people through its education programs and resources. It
publishes the Do-It-Yourself Credit File correction Guide, now in its 16th
printing and has distributed over one million “Credit/Debit Card Warning Labels”
and “Credit/Debit Card Sleeves” world wide.
The ICFE became an official partner with the Department of Defense/Financial
Readiness Campaign in June of 2004.
The ICFE is also a partner in the national Jump$tart Coalition for Financial
Literacy and the California Jump$tart chapter. The ICFE staff is also active
with San Diego Saves, an offshoot of America Saves, and the California Student
Debt Resource Awareness Project (CASDRAP) (studentdebthelp.org).
The ICFE’s on-line help for consumers who spend too much was featured in PARADE
Magazine in the Intelligence Report section. The money helps and tips are from
“The Money Instruction Book,” a course in personal finance, positioned to become
among the premier programs in the new bankruptcy and debtor education
initiatives.
The ICFE Web site at:
http://www.icfe.info helps consumers with mending spending, learning about
the proper use of credit, budget and expense guidelines, how to set up and
implement a spending-plan and also how to access financial education courses and
videos and how to teach children about money. Other ICFE services include a free
eNewsletter, and an online resource center of financial education learning
tools, including videos, books, software and personal finance courses.
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