Credit Lenders Close the Courtroom Doors: Part One
Recently on Warren Reports, James Weingarten wrote about a new Utah law that allows credit lenders to contractually bar their customers from bringing class action lawsuits. James is right to be worried about the ramifications of this new law outside Utah. Take a look at the following paragraph from Ballard Spahr, the attorneys behind the new law:
“Not only will the statute apply to class actions brought in Utah, it should also apply to class actions filed elsewhere whenever a valid contractual choice of Utah law provision has been included in the agreement.”
Let that sink in for a moment.
As if credit card contracts aren’t already a minefield for unsuspecting consumers, now a bank can simply include a provision that states: “This agreement shall be governed and interpreted by, through and under the laws of Utah.”
Sounds harmless and mundane enough, doesn’t it? That’s the problem.
Should anyone argue that it is unrealistic to fear credit card lenders making a massive run to Utah to gain the benefits of this new, I remind you of the shift towards states with favorable usury laws following the US Supreme Court’s 1978 ruling in Marquette.
At what point do we say “enough is enough” and admit that the average consumer should not need to retain a lawyer in order to understand his or her own rights under a standard commercial contract?
More to follow next week...
As I let this sink in, a question emerges. Are state legislators going to start changing laws to compete for lenders to move to their state and bring more wealth to their state with the jobs that banks can provide through exporting their lending business to the rest of the country? What are the implications of that?
Somehow I don't think understanding a financial services contract is going to get any easier. I wonder if someday banks will be able to pick and choose laws from various states to construct a one-sided contract that is backed by specific laws hand picked from various states. This could be done by changing the venue laws. Seems far fetched - but I wonder. These attorneys are quite creative. The more complex things get, the better for the banks, especially when everyone believes borrowing and carrying credit cards is necessary to live in our society. They've got us hooked, addicted, to the point we self destruct while they push debt like a drug.
Jim Anderson
www.lighthouseonline.net
April 24, 2006 8:15 AM | Reply | Permalink
In reference to the creativity of financial services attorneys, see this old post by Jason Spitalnick titled "Truth in Lending? Not Even Close...".
Jim Anderson
www.lighthouseonline.net
April 24, 2006 8:58 AM | Reply | Permalink
When I was in my early twenties I was working part-time as a waitress and making weekly cash deposits into my Bank of America account. It was supposed to be free--no charges for anything except overdrafts.
Well, I start getting $9 taken out of my account every month. I call them up, they say they've changed my account so that I can only go into the bank once a month for free--everything over that is a $3 charge for each time I go in. I protest and say I never received notice. Without missing a beat, they say OK, we will take off these charges, but now you have been notified. I say "why didn't you send out a notice?" And again they say well, now you are notified. They know exactly what they're doing--if someone threatens to raise a stink, they pacify them a little so it never gets bigger.
I don't doubt for a second that somewhere back a few years before that when I signed up for the account there was something in there allowing them to pull this. With this Utah credit card cr*p the deceit will be even more hidden.
April 25, 2006 8:55 AM | Reply | Permalink
JoC, sadly, your experience is all too common. You might be interested in looking through some of my previous posts regarding "change-in-terms" provisions of credit card contracts. I didn't link to them here, because there are quite a few. Thanks for your comments and for your continued reading!
April 25, 2006 8:58 AM | Reply | Permalink