Earlier today, the US Treasury released its proposals for financial regulatory
reform. Here are some quotes from the proposal document based upon a very quick read:
Page 67: "In the credit card
market, the opacity of increasingly complicated products led major card
issuers to migrate almost uniformly to unfavorable methods for assessing fees
and interest that could easily trap a responsible consumer in debt.
Competition did not force these methods out, because consumers were not aware
of them or could not understand them, and issuers did not find it profitable
to offer contract terms that were transparent to consumers. For a variety of
reasons, regulators have not brought enforcement actions under existing
law."
Page 69: "One example is overdraft protection plans. These are a form
of consumer credit, and consumers often use them as substitutes for other
forms of credit such as payday loans, credit card cash advances, and
traditional overdraft lines of credit. However, overdraft protection plans
have not been regulated as credit, and, as a result, consumers may not overtly
think of the plans as credit. Consumers may not, therefore, take the same care
in their use of overdrafts that they take with other, more overt credit
products. The CFPA would be authorized by existing statutes to regulate
overdraft protection more like a credit product, with Truth in Lending
disclosures as appropriate. The CFPA could also prohibit charging for
overdraft coverage under a plan unless the consumer has “opted in” to the
plan, just as the Credit CARD Act prohibits over-the-limit fees unless the
consumer has “opted in” to over-the-limit coverage. It could also require
affirmative consent at point of sale with debit transactions or at an ATM
machine before collecting an “overdraft fee”. "
Also, here's a Fact Sheet on the reform proposals strengthening consumer protection.
