Is Your Credit Card Company Stalking You?

The question may sound ridiculous – unless the answer to “What’s in your wallet?” is a Capital One card.

Some of Capital One’s customers recently received a contract update, and at least one of them was concerned by what he read there. Rick Rofman, a resident of Van Nuys, Calif., spoke to the Los Angeles Times about his reaction to the contract that included provisions for contacting cardholders by “personal visit,” as well as the more traditional phone, fax, text or email. The visits can be at your place of employment or at your home.

“I guess most people don’t read the inserts, but I happen to have read it,” Rofman said. “I’m 71 years of age, and I have never seen this anywhere.”

Capital One (COF) also reserves the right to “spoof,” or mislead, caller identification services.

When journalists contacted the credit card company, it was quick to clarify that this language wasn’t new and that it didn’t mean cardholders should expect to find Capital One employees peering in their windows or lingering in workplace parking lots.

Company spokeswoman Pam Girardo told the LA Times, “Capital One does not visit our cardholders, nor do we send debt collectors to their homes or work,” except in cases of big-ticket sporting goods like jet skis. Girardo also said that Capital One always intends to appear as “Capital One” on its customers’ caller ID, but that sometimes how it appears is out of the company’s control.

The attention generated by the article, however, led Capital One to announce it would review the language in its contract. Six weeks later, as far as the public can see, that review hasn’t led to any change. I suspect Capital One will keep “reviewing” the language until the news cycle moves on, and then quietly leave the provisions in place.

We know what Capital One is doing, and it is obvious why it is doing it. The contract’s terms gets customers to agree to “voluntarily” waive protections under various statutes, to the extent they are legally allowed to grant such waivers. And the bank is doing so, in all likelihood, primarily to make bad credit card debt more valuable to third-party debt collectors who purchase it for pennies on the dollar and then proceed, as aggressively as the law allows, to collect the full face value of those debts.

Of course, it would be nice if Capital One was upfront with its customers about the fact that it is asking them to waive legal rights and protections that would otherwise apply if they fall behind on their credit card payments. But we don’t live in a world that it always very nice.

Instead, we live in a world in which credit card issuers take a significant financial risk by issuing unsecured debt to consumers, who buy things that are almost always worth less than the retail price as soon as they come out of the box. Card companies make up for that risk by charging very high interest rates, which is fair. Then they try to reduce the risk for which the high interest rates compensate them, which may be fair or unfair depending on the specific steps and the manner in which they are carried out.

Credit card companies have been known to try to get consumers to “reaffirm” debts that would otherwise have been discharged in bankruptcy – a practice that is almost never in the customer’s interest. They have been known to try to get relatives of deceased cardholders to pay debts for which the survivors are not legally liable. For some card issuers, and probably more third-party collectors, whatever works and is at least arguably within the law is OK.

Just because something is legal, however, doesn’t mean customers have to put up with it. Assuming Capital One’s review doesn’t lead to any changes, customers who don’t like the contract can take their business elsewhere.

Should you cut up your Capital One card? I did a few years ago, though for a different reason; the company instituted a new annual fee that I did not care to pay on a formerly fee-free card that I had used heavily, as my primary credit card, for years. After I closed that account, Capital One flooded my mailbox with offers for fee-free cards. I never took them up on it.

As for the aggressive credit agreements, if you are the sort of person who never over-indulges on credit card debt and who always pays the bill in full every month, the aggressive collection practices won’t apply to you. You can ignore them if you choose. I just wouldn’t take the bank’s word that it won’t really spoof your caller ID. I would assume the right asserted in the agreement will be used for telemarketing purposes to the extent the law allows.

If this bothers you greatly, get a card from another bank. If not, you can live with the knowledge that the card in your wallet means you are engaged in a surprisingly personal relationship with Capital One.

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