Predatory lending: is The Credit CARD Act enough?
| Date | 29 December 2011 |
| Pages | 99-111 |
| Published date | 29 December 2011 |
| DOI | https://doi.org/10.1108/13590791211190759 |
| Author | William A. Stadler |
| Subject Matter | Accounting & finance |
Predatory lending:
is The Credit CARD Act enough?
William A. Stadler
Department of Criminal Justice and Criminology, University of Kansas,
Kansas City, Missouri, USA
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/implications – While the response to predatory lending has been
well-intentioned, lenders are constantly fin dings new ways to circumvent current law and
regulations. As a result, research must continue to properly investigate and address the issue.
Practical implications – Exploration of credit card lending practices is relevant in the context of
the current economic environment. Further, investigation of the prevalence and impact of “predatory
lending,” as well as the recent Congressional response, are necessary to determine if enough is being
done to stymie this problem and protect consumers from continued economic marginalization.
Originality/value – This paper provides current information relevant to the pervasive issue of
predatory credit card lending in the USA.
Keywords United Statesof America, Legislation, Loans, Fraud,Credit cards, Predatory lending
Paper type General review
Credit cards and predatory lending
Recent economic circumstances in the USA have reignited debate across the media, as
well as academic, political, and economic sectors, regarding the questionable business
practices of corporate America. Throughout the previous decade and prior to their
recent insolvency, many banks and lending institutions were engaged in processes of
extending credit to consumers on an unprecedented scale. However, the unraveling of
Wall Street titans and a good number of other businesses across the commerce
industry has revealed an extraordinary number of dubious transactions between
corporations and the American consumer. The mechanism through which lending
institutions target and generate revenue from consumers via credit cards could
arguably be described as exploitative profiteering. Mortgage lending practices have
recently been exposed as not only complex and questionable, but possibly deceptive
and illegal, while predatory credit card lending has been ignored.
Still, consumers are constantly bombarded with subtle (and some not so subtle)
reminders to spend more, save less, and obtain those goods and services they desire
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
Predatory
lending
99
Journal of Financial Crime
Vol. 19 No. 1, 2012
pp. 99-111
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590791211190759
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