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Ellison Credit Card Provision Becomes Closer to Law

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Author 7739
Message Congressman Keith Ellison

Clears Financial Services Committee

Washington, D.C. – A provision authored by Congressman Keith Ellison’s (D-Minneapolis) has become an integral part of the Credit Cardholders’ Bill of Rights (H.R. 5244), the premier vehicle for credit card reform, and consumer rights in the U.S. Congress.  The Credit Cardholders’ Bill of rights was passed by the full House Financial Services Committee in the closing days of Congress before the Congressional District Work Period.  H.R. 5244 should now be scheduled for floor action.

The Ellison provision would prohibit card companies from imposing the practice of universal default on consumers.  Universal default is the practice of increasing interest rates on the existing balance of a cardholder in good standing for reasons unrelated to the cardholder’s behavior with that card.

“This is wonderful news for consumers.  The playing field between cardholders and credit card companies has become very one-sided in recent years.  This provision puts an end to an unfair practice for consumers and a boom for card companies.  The Credit Cardholders’ Bill of Rights is long overdue, and lets consumers know what their rights are, and what recourse they have,” Ellison stated.

Consumer credit card debt is now closing in on the $1 trillion mark – double the amount held in 1996.  “This is due in large part because more and more Americans are turning to their credit cards to help pay bills, buy groceries and simply make ends meet in this troubled economy,”  Ellison said.  “Troubled economic times should not give unscrupulous companies a license to loot cardholders,” the 5th District Congressman stated.

The Credit Cardholder’s Bill of Rights is authored by Congresswoman Carolyn Maloney (D-NY) and co-authored by Congressman Ellison and Congressman Lincoln Davis (D-TN), all of whom sit on the Financial Services Committee.  It has an additional 153 co-sponsors.

Most recently, and in an historic move, the Federal Reserve acknowledged that there were unfair and deceptive practices in the credit card industry, and proposed regulatory rules for doing away with many of them.  Some of these practices identified as unfair and deceptive are the same ones proposed in the Credit Cardholders’ Bill of Rights: including the Ellison provision on Universal default; charging interest on balances that have already been paid off; unfairly allocating payments to make it difficult for cardholders to pay off higher interest rate balances; and marketing fee-heavy “subprime” credit cards to unsuspecting customers.

“I am especially pleased that the Federal Reserve concurs with us on the need for credit card reform.  However, the regulatory process by which the Federal Reserve operates has already watered down the initial proposal, and is likely to be too little and too late for struggling consumers who need help now,” the 5th District Congressman said.

The Credit Cardholders’ Bill of Rights is supported by leading consumer group advocates, as well as groups as diverse as The National Small Business Association, and the Service Employees International Union (SEIU).


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Keith Ellison is the congressman from Minnesota representing Minneapolis
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