Just Saying No to Credit Cards and Banks Not So Simple

Is it possible that you can be issued a credit card, and billed for the annual fees, without ever ordering that card?

Debra Jensen, a San Gabriel Valley resident, says it happened to her. The first she knew anything was amiss was Feb. 24, when she got a bill for $25 as an annual renewal fee for a Visa card issued by First North American National Bank of Richmond, Va.

But this, Jensen told me in an e-mail message, was “a card I had never applied for” and had never even received, and her thought was “maybe somebody applied for credit in my name and has been charging the card for a month.”

Attempts by Jensen to find out what had happened by calling the bank’s customer service department were confronted by a demand that she first punch in her Social Security number, which she didn’t want to do. But by holding on, she finally got a man named Eric on the line.

After accepting the card number on the bill, and Jensen’s home telephone number in lieu of her Social Security number, the customer service rep pulled up the account on his screen and, she says, told her “that because I did not respond to one of their notices, and did not check ‘no’ on the application, they assumed that I wanted the credit card and set up an account for me.

“Stunned, I asked him to cancel the account,” she said. (That has now been done).

But what happened here? After all, federal regulations state that sending a consumer a credit card without his or her permission is illegal, subject to a $100 to $1,000 fine. But there is an exemption for cards substituting for another card issued by the same company.

Morgan Stewart, spokesman for First North American, first stated that Jensen’s case was such a substitution, that she had a Circuit City card issued by the bank’s parent company and that the bank had issued instead a general-use Visa card, which would be permitted by the government.

Jensen, however, denied ever having a Circuit City card, and, on checking, Stewart said he discovered this was not a substitution.

Then he gave the bank’s third explanation (counting the customer rep’s) for what occurred, saying that on Jan. 7, 1998, Jensen said yes to a telemarketing pitch for the Visa card, a card had been sent out, and, more than a year later, she was billed for the renewal fee, despite the fact that she had never activated the card and therefore had never used it.

Jensen, however, found this ridiculous. “I never, never, never, never say yes to a telemarketer,” she told me. “And I never received this card in the mail.”

I can understand Jensen’s unhappiness, and there have been a few other instances in recent months in which readers have told me of receiving credit cards (from other banks) that they had not ordered.

Meanwhile, I’ve heard about another matter that revolves around saying no. It has to do with the Bank of America notifying more than 25 million account holders that it intends to share their personal account information with the bank’s affiliates unless the bank is notified in writing that an individual does not want the sharing to occur.

In the notice, which was in very small print, Bank of America referred to “affiliates” without saying how many there were.

I asked Cary Walker, a spokesman for the bank, how many affiliates it had that could legally share in the information. He said that it was “technically” in the hundreds, taking 32 pages to list, but that sharing would be confined to those providing financial services directly to the consumer. But he couldn’t say precisely how many of those there were either.

Walker asserted that the sharing of information would often benefit the consumer, because it would allow one part of the bank to know what terms, advice and solutions were being offered in other parts and facilitate giving a customer the best deal. He said an example would be refinancing a mortgage.

The Times’ managing editor for news, Leo Wolinsky, brought this to my attention. He resented being told that he had to write to a Bank of America office back East and include his name, address, telephone number, and account and Social Security numbers to prevent personal information from being shared.

The letter to Wolinsky was signed by “Craig Hull, Vice President,” but I was unable to contact him, and the bank’s directory did not list him. Walker said he had left the bank’s employ after signing the letter.

When I checked with the government regulator, the Federal Reserve Board, I was informed by the assistant director of the agency’s Consumer Community Affairs division, Adrienne Hurt, that Congress in 1996 passed a bill authorizing all the nation’s banks to do just what the Bank of America did in these notices.

Congress in the last session rejected a proposal that bank customers would have to specifically say yes to such a sharing of account information, rather than be required to write a letter saying no. Hurt said, though, that the Federal Reserve is considering an interpretation of the law allowing permission to be withheld orally, instead of in writing.

Requiring a yes rather than a no could result in a big difference in the banks’ authorizations to transfer personal information.

The Bank of America says fewer than one-tenth of 1% of those receiving its notice about sharing information denied their permission in writing. I wonder if many more than one-tenth of 1% would have specifically given their approval, if Congress had shifted the burden to a yes rather than a no.

It is on such small details that lobbying Congress is often focused. And when the industry is lobbying hard and the public is scarcely heard, often the decisions may go against the public interest.

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at: ken.reich@latimes.com