Credit Tips: Citibank Credit Card Change in Terms

Posted On: February 24, 2005

Author: blacksurfer
Joined: 15 Feb 2005
Posts: 5
Posted: Thu Feb 24, 2005 1:34 pm
Post subject: Arbitration provision and bankruptcy

I rec’d a “Notice of Changes in Terms” letter from Citibank for a credit card inwhich they jacked up finance charges, late fees, and overlimit fees. They even state that the Arbitration provision shall survive the bankruptcy of any party.

Is this saying that Federal Bankruptcy laws would not apply to these credit account because of the arbitration agreement?

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Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 564
Posted: Thu Feb 24, 2005 6:20 pm

Blacksurfer,

Greetings and welcome to the board! Got the same notice in the mail myself and, although I’m not an attorney, I don’t think it means that. But, it sure doesn’t look very consumer friendly.

There is going to be a related article that will run this Sunday in the Baltimore Sun that I will link to (have been helping with the article).

Out of curiosity, how did you find out about our website?

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-301-8474 FX

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Author: blacksurfer
Joined: 15 Feb 2005
Posts: 5
Posted: Fri Feb 25, 2005 12:11 pm

Link from creditwrench message board

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Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2601
Location: Illinois
Posted: Sat Feb 26, 2005 10:07 am

That don’t seem right, that a company could prevent discharge in bankruptcy other then the government loans, child support and such that are exempt now.

There are still some things out of the creditor’s control, like being able to garnish income from people on SSI, or collecting on debt that has already been discharged in bankruptcy. Plus the individual state statute of limitations expiring on them being able to sue to collect on outstanding debt.

While back a past employer of mine fired a employee due to her filing bankruptcy, and he thought it was perfectly legal, even though the bankruptcy code forbids employers from doing this - he wrote it into our SOP and she had signed it. Well now he is being sued, and it don’t look like he is going to win this case for trying to obligate her to disregard her rights to file.

I would hope that the creditor would be looked at the same way, trying to make such a provision.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-663-0033 FX

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Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 564
Posted: Sun Feb 27, 2005 10:31 am

Following is the article that appears in today’s Baltimore Sun. I am proud to say that http://www.CardRatings.com is mentioned in the article. Enjoy!

Arbitration terms lurk in fine print of credit cards

Eileen Ambrose — Personal Finance

WHEN consumers shop for a credit card, they’re looking for the lowest interest rate, no annual fee or the best perk, such as frequent-flier miles.

Few pore over the fine print of card agreements. If they did, they might see they agreed to settle disputes with the card issuer through binding arbitration, giving up the right to sue.

Since the 1990s, large card issuers have been adding arbitration clauses to card agreements hoping to stave off expensive class action lawsuits. Supporters of arbitration say having a third party hear the facts and make a binding decision is a lot quicker and cheaper for both sides than going to court.

Consumer advocates, however, say arbitration overwhelmingly favors card companies that select which arbitration company will handle thousands of credit disputes each year.

A report this month by the National Consumer Law Center warns that a couple of big issuers use arbitration as a fast-track means of collecting debts from consumers who often are confused or unaware of the legal proceeding, and thus are likely to lose. These consumers can be forced to pay debt they don’t owe plus arbitration costs, the group said.

Also this month, more than a dozen public-interest organizations launched a campaign to stop the spread of binding arbitration clauses, which have been cropping up in mortgages, car loans, health insurance plans and employer handbooks.

Arbitration rules vary, but it generally works like this: Notified that a claim is going to arbitration, consumers have, say, 30 days to respond. The arbitration may be done by mail, over the phone or in person.

If the arbitrator rules against consumers, they have 90 days to contest the decision. Grounds for overturning a decision are limited and difficult to meet. If consumers don’t challenge the ruling, the card issuer can get court approval to enforce the arbitration award by, say, garnisheeing wages.

Many consumers will never reach arbitration with a card company. But when it happens, the process can lead to confusion and years of frustration.

Take the case of Beth Plowman, an international public health adviser who suspects that her identity was stolen after she used her MBNA card to pay a hotel bill during a business trip to Nigeria in 2000.

The Damascus resident said she rarely used the card and didn’t notice she wasn’t getting statements. But after six months, MBNA called her to collect more than $26,000 in debt incurred by someone buying sporting goods in Europe.

You can read the rest of the article here:

http://www.baltimoresun.com/business/yourmoney/bal-bz.ambrose27feb27,1,1240954.column?coll=bal-business-indepth&ctrack=3&cset=true

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-301-8474 FX

View our latest credit card ratings!