Predatory lending: is The Credit CARD Act enough?

Abstract

Purpose – The purpose of this paper is to inform readers about pervasive “predatory lending” practices in the credit card industry and to explore the limitations of the Congressional response to this problem.Design/methodology/approach – National attention has been focused on illegal and unscrupulous behavior in the mortgage industry, but practices common to the credit card industry have been virtually ignored. This issue is explored through a description of the modus operandi of credit card lenders, details of regulator positions on predatory lending, and the recent Congressional response to this trend via The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.Findings – “Predatory lending” is a fraudulent practice that presents serious financial risks to consumers. Recent attempts to minimize those risks by Congressional statute may be inadequate. This paper identifies some of the limitations of those regulatory provisions to raise awareness of the issue.Research limitations/i...