Banks Having to Defend Credit Card Insurance

November 16, 2011
Reuters News 
credit card news

Complaints on consumer Web sites to federal regulators and in a bevy of lawsuits filed by West Virginia and other states, consumers have lambasted credit card insurance, saying the coverage often leaves them feeling shortchanged. Debt protection products are sold on the idea that they suspend or cancel credit card debt for a time following a critical event, such as a lost job, disability, or death. However, many customers complain that they were unwittingly enrolled in the coverage or unfairly turned down for benefits. A government watchdog has directly urged the new U.S. Consumer Financial Protection Bureau to take a hard look at payment protection, after other attempts to rein in the product fizzled. The Government Accountability Office said in March that the bureau, which was set up under last year's Dodd-Frank financial oversight law, should assess the value of the products. It said cardholders only receive 12 cents of benefit for every dollar they spend on debt protection fees. The nine largest credit card issuers amassed $2.4 billion in fees for debt protection products in 2009, and only remunerated $518 million of that to consumers in benefits. The banking industry argues that payment protection plans can be expensive but provide a necessary service.
Web Link

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.