More Consumer Complaints About Credit Card Practices
This is the second post I’ve run on this issue, so it seems like the Shanghai CBRC is serious about regulating in this area:
Complaints about credit cards rose in the third quarter to become the biggest gripe about banking services, the Shanghai banking watchdog said today.
Cardholders complained about banks’ misleading marketing campaigns, overcharges on overdrafts and lenders’ means of settling unpaid bills.
In face of rising complaints, the watchdog said in late September that bankers will no longer be allowed to outsource signing up new cardholders.
The regulator also warned banks against incentives that reward salespeople only on the basis of how many new cardholders they bring in. (Shanghai Daily)
Game on.
From my perspective, this can only be a good thing. I grew up seeing the explosion of credit card use in the U.S. Some of that was very positive and useful for consumers, but I also saw the dangerous side of things early on.
The first danger sign was when I saw the credit card companies on my college campus trying to get young kids to sign up for new cards. That was many, many moons ago.
You can probably just Google “credit card, consumer, complaint” or any number of keywords to get thousands of pages devoted to the nasty tactics of banks when it comes to getting new cardholders and then charging them excessive interest rates and fees.
China is in the excellent position as a still-developing nation that it can learn from the mistakes of others. This is certainly one of those areas. Unfortunately, China cannot learn from the tough regulatory actions of the US government in how to rein in banks that harm consumers, simply because US regulators have not figured out how to do this yet. With the sway that the financial services industry has in D.C., I’m not sure if they ever will.
But China can certainly see the negative consequences of excessive consumer debt and the “trap” that many folks get in with credit cards and interest/penalty payments. Hopefully regulators will not let that kind of stuff become entrenched over here.
By the way, where is CBRC in all this? Why is Shanghai BRC taking the lead here? I honestly have no idea since I don’t represent banks (and based on the content of this post, and my blog in general, I probably never will).
I hear ya! I remember being on campus in California in the early ’90s and trying to elbow and fight my way through a gauntlet of card pushers trying to get students hooked on the allure of spending money they didn’t have.
My roommate got his card and maxed it out the very first week he had it!
Sort of like the old joke: “I MUST still have money in the bank because I still have half a checkbook full of checks!”
More anecdotal than fact-based: but it seems to me that people living in Shanghai are more accustom to using credit cards than most other cities, and complaints regarding unfair practices are more likely to come from areas with concentrated use of plastic. Hence Shanghai taking the lead on this.