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Bank of America Credit Card Policy Tantamount to Fraud

Tomorrow Barack Obama will officially become our 44th President, and his top priority will be to deal with the economic mess in which we now find ourselves:

President-elect Barack Obama will demand that banks receiving public support step up lending, top advisers said on Sunday, as they promised to make restoring the flow of credit a top priority for the new US administration.

“I think he is going to have a strong message for the bankers,” David Axelrod, a senior Obama strategist told ABC’s This Week. “We want to see credit flowing again. We don’t want them to sit on any money that they get from taxpayers.”

Lawrence Summers, the incoming director of the National Economic Council, told CBS’ Face the Nation that banks receiving public injections of capital would be “expected to lend above their baseline levels”.

Well, before the federal government hands out anymore taxpayer money to banks, I think they ought to take a good hard look at some of the deceptive, and dare I say it, fraudulent practices of America’s largest banks.

Let’s just take Bank of America for example. Bank of America is poised to receive another $20 billion in bailout dollars from America’s taxpayers:

Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.

The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America’s rising consumer loan losses.

The second lifeline brings the government’s total stake in Bank of America to $45 billion and makes it the bank’s largest shareholder, with a stake of about 6 percent.

But, here’s the thing… While Bank of America is securing billions upon billions of dollars in bailout money from the taxpayers, they are also scamming credit card holders. To illustrate my point, please read the letter below that I filed this weekend with the Comptroller of the Currency among others:

Dear Comptroller of Currency:

I am writing to request an investigation into what I believe to be an intentionally fraudulent and predatory practice by Bank of America and their credit card division to raise interest rates on consumers who in good faith pay their bills on the due date printed on their statement. Like millions of Americans, I pay the vast majority of my bills online. With the shortened period that most credit card companies are now allowing from invoice date to due date, it seems like the only way to ensure your payment is received by the due date.

On my most recent statement, I noticed that the special 2.99% promotion I was enjoying had jumped to 14.99%. As I always pay my bills on or by the due date, I called Bank of America to inquire what caused the interest rate to rise 500% in one months time. They explained that although my payment was indeed made on the due date shown on my previous statement, December 14, 2008, that it was not processed until the next day, December 15, 2008. For this reason, I was charged a $39.00 late fee and saw my interest rate increase exponentially.

It turns out that December 14, 2008 was a Sunday, and Bank of America does not process payments received on a Sunday.

So, the question is raised, “Why would Bank of America intentionally set a Sunday due date if making payment on this date is going to cause the consumer to be considered late?” When I spoke to the customer service representative, I was told that when I logged online to pay my bill, there was a disclaimer that it would not be processed on time. Of course, by that point in time there is absolutely no way to make a timely payment on the account – because Bank of America purposely set the due date to fall on a SUNDAY. In fact, he told me, even if I had paid the bill on Saturday, the day before it was due according to my statement, it still would not have been processed in time.

On the back of every Bank of America Statement is the following written statement:

Payment Due Dates and Keeping Your Account in Good Standing
Your Payment Due Date will not fall on the same day each month. In order to help maintain any promotional rates, to avoid the imposition of Default Rates (if applicable), to avoid late payment fees, and to avoid overlimit fees, we must receive at least the Total Minimum Payment Due by its payment Due Date each billing cycle and you must maintain your account balance below your credit limit each day.

It does not state that if your Payment Due Date falls on a weekend, you should make your online payment on the business day prior to the Payment Due Date. Each and very statement includes an “Important Information About Your Account” section, and although there are several messages printed, not one of these messages tells you to note that your Payment Due Date this month falls on a Sunday, and you should pay on the business day before in order to remain in good standing.

Now, I am fortunate. I have enough good credit that I’m able to transfer this debt to another credit card company at an equally low rate of interest and avoid falling prey to Bank of America’s attempt to defraud. However, I would imagine that in these tough economic times millions of other Americans do not have the same option. As such, and in light of the billions in federal bailout funds that Bank of America has received, I strongly urge you to investigate this practice by Bank of America to purposely set their Payment Due Dates to fall on a Sunday.


Mario Burgos

Now, keep in mind, I’ve defended just about every type of lending practice out there. I honestly don’t have a problem with lending institutions charging what some may see as exorbitant rates. I believe that the borrower has a responsibility to act prudently. However, this institutionalized practice by Bank of America in an attempt to defraud must be investigated, prosecuted and, I can’t believe I’m about to say this… It must be regulated.