Loopholes w/ Unsolicited Credit Card Offers
Loopholes allow unsolicited credit card offers to continue…
Can a credit card company issue you a credit card that you never applied for? Well, that’s just what’s happened with the Wal-Mart Discover card. The new Discover cards, issued by GE Money, were sent to people on the now defunct Montgomery Ward credit card list that was purchased by Wal-Mart Stores, Inc. in an attempt to renew the old accounts. Finding a fully functioning credit card in the mail can be a bit disconcerting, but it’s even worse when you don’t expect it and accidentally throw the card in the trash where anyone could find it and activate the offer. The big question many consumers are asking is whether it’s legal for a company to send an unsolicited credit card offer you never authorized?
Although the Federal Truth in Lending Act prohibits companies from sending credit cards to consumers without their request, there are loopholes. “When a company buys another company, they can decide to switch credit card providers or they can renew a credit card list,” said Linda Sherry, director of national priorities for advocacy group Consumer Action. They’re never supposed to send you a card you didn’t request, but they can replace your card with another card.” For instance, when Citigroup acquired the credit service division of Macy’s, they began replacing 3 million dormant Macy credit accounts with Citi Cards.
Another downside to this questionable practice is that the credit scores of consumer who cancel the cards, which they never requested in the first place, may be negatively impacted. “Creditors have exploited the loophole to do more and more things like flipping store cards to general purpose cards. The original intent of the law was to prevent these very situations,” Chi Chi Wu, staff attorney with the Boston-based National Consumer Law Center, said. “They say they ‘renewed’ cards, but no one was using these cards at the time.”
So what should consumers do? Even if an unsolicited credit card is never activated, it doesn’t mean the account is closed. Consumers should review their credit report regularly and watch for new accounts. Also, to reduce the number of unsolicited credit card offers in the mail contact the three major credit bureaus at 888-567-8688 to opt out of pre-approved credit card lists. Or, opt out of pre-approved offers online at: https://www.optoutprescreen.com. You can also write federal regulators that oversee banks and financial institutions to complain.
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