by Mike Bevel CollectionIndustry.com


According to a report released back in June by the Fed, credit-card issuers do not solicit customers or extend credit to them without assessing their ability to repay debt.



This news came as a bit of a surprise to consumer groups, who argue that the report is overly protective of the banking industry.



As CollectionIndustry.com mentioned in an earlier story, there?s plenty of anecdotal and circumstantial evidence to cast significant doubt on the Fed?s report. Credit card offers fly out so fast and frequently, one might wonder if an angel gets its wings every time a credit offer is extended. However, consumer groups arguments against the Fed?s reports just aren?t robust enough to be compelling.


In a USA Today story, Linda Sherry, director of national priorities for Consumer Action, complains that “from a consumer-advocate point of view, I feel that (the Fed) just bends over backwards for the banking industry.” She goes on to suggest that there’s a pattern of card companies “continuously rewarding you with higher credit limits” even if consumers don’t want them.


What these arguments fail to take into account is that having a higher credit limit doesn?t necessarily mean one must use that higher credit limit. Likewise, soliciting for new credit card applicants isn?t the same as forcing credit cards on the unwilling. The consumer groups? arguments are ultimately a little insulting to consumers ? that consumers aren?t smart enough to manage credit on their own.


Which, in some cases, might be the case. It certainly wouldn?t be beyond the pale to suggest that not everyone with a credit card knows how to use one. But consumer groups would be best served in the debate by focusing on the facts, rather on alleged tales of consumer woe. Consumer groups should challenge the Fed?s initial report ? which, again, seems pretty circumstantially suspect ? and spend less time trying to paint compelling pictures of consumers in crisis.


Next Article: POV: "In Defense of Debt Collection"

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