Bankruptcy Blog: May 20, 2005

|
May 20, 2005 2:39 p.m.

The National Consumer Law Center is featuring a report on bounce protection scams. (Known in the bizarro-speak of the credit industry as “sound financial strategies.”)

I wrote about these earlier, but apparently it’s even worse than I thought. Some highlights: ATMs include the overdraft line of credit on-screen as part of the available funds. ATM users aren’t notified that they’re withdrawing more than they have until the bill arrives later. Annualized interest rates on the cash lent to cover bounced checks and withdrawals can reach 1520%. That is not a typo. And thanks to a loophole in the federal Truth in Lending law, banks never have to reveal the actual interest rates Customers automatically get “protection” whether they want it or not, and must specifically request to be taken out. Consultants hyped bounce protection to banks as a way to compete with payday lenders — barely legal loan sharks that prey on our cash-strapped troops (among others).

A highly recommended read. If you like horror stories.

Introducing
The TPM Journalism Fund: A New Way To Support TPM
We're launching the TPM Journalism Fund as an additional way for readers and members to support TPM. Every dollar contributed goes toward:
  • -Hiring More Journalists
  • -Providing free memberships to those who cannot afford them
  • -Supporting independent, non-corporate journalism
Are you experiencing financial hardship?
Apply for a free community-supported membership
Comments
advertisement
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Senior Editor:
Special Projects Editor:
Editor at Large:
General Counsel:
Publisher:
Head of Product:
Director of Technology:
Publishing Associate:
Front-End Developer:
Senior Designer:
SPECIAL DEAL FOR PAST TPM MEMBERS
40% OFF AN ANNUAL PRIME MEMBERSHIP
REJOIN FOR JUST $30