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FTC Needs to Improve Protections for Consumers

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I used my Discover credit card to purchase a home inspection. The home inspection company did a terrible job. It turns out they weren't even certified by the two professional home inspection associations in which the company claimed membership. This false advertising should have made it an "open and shut case" when I filed a chargeback dispute with Discover. On top of that, the inspection company advertises a money-back satisfaction guarantee which it did not honor.

After Discover Financial Services ruled against me, I sent Discover proof the inspection company was not a member of one of the associations. Discover's reply was that they already considered that information when making its decision. How could Discover have considered that information when I hadn't given Discover that information yet?

Next, Discover asked for proof of the inspector's satisfaction guarantee. I sent it to Discover. Discover replied it wasn't enough to rule in my favor. Why did Discover ask me to send the guarantee to them then?

If you have a dispute against Discover Financial Services or Discover Bank, Discover forces you to go through arbitration in which the cards are stacked in big business's favor.

My complaint is partly based on the Federal Trade Commission's "Holder Rule" [16 CFR 433]. Situations like mine with Discover are not uncommon. There needs to be clarifications and reforms of the Rule. Unfortunately, if a creditor doesn't follow the Rule, the FTC won't do anything about it. They simply tell you to file a complaint with the Consumer Financial Protection Bureau.

Further, the FTC should require that lenders share the responsibility with sellers to comply with the Rule's notice requirements. Currently, it's the consumer's responsibility to ensure the Holder Rule is included in loan documents. The FTC needs to take enforcement action against lenders that fail to include the Holder Notice in credit agreements.

Creditors sometimes insert a waiver of consumer's rights in credit agreements. The FTC needs to come out against such practices.

The FTC needs to issue an opinion that the Holder Rule takes precedence over state law. If state law does not allow consumers to bring claims against assignees, the Holder Rule allowing consumers to do so still applies.

The Commission must issue an opinion interpreting the Rule to allow a consumer to recover attorney fees from a holder.

Lastly, the FTC needs to ban forced arbitration clauses.

We need to demand consumers be protected against companies such as Discover.

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William holds a BBA from Western Michigan University and a Master of Environmental Law and Policy from Vermont Law School.

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