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Creditor Abuse

called the automated teller for his required payment and was given the dollaramount, but not the change owed. However, after paying the acknowledged amount, theconsumer received a late charge. When the credit holder questioned the company, their responsewas that the automation did not include the change owed because it would result in extra airtime charges on the creditors eight hundred number. Another consumer was devastated whenhe accepted an offer for a card with a $1,200.00 limit from First North American Bank, but afterreaching the limit the creditor began to lower the limit and raise the interest rate. Therefore, heacquired a higher amount owed in interest, plus over limit fees (Heady, 1999). Furthermore,Weber and Palmer (2000), state that when a consumer pays late, the creditor has the right toraise interest rates, however, if a consumer does not use a card, the creditor may chargeinactivity fees. Cut up the card and the creditor is entitled to charge a closing fee. A consumer with flawed credit suffers the most. Although creditors are happy to issue acredit card, creditors aggressively demand unfair funds from the consumer. Nelsons Reports,states statistics concerning Providian Financial Corporation, claiming that their net income grewby 86% when they authorized forty five-million users of which 30% were considered non-primecustomers (Weber & Palmer, 2000). A non-prime customer is an individual that has a low creditrating or other flaws on her/his credit file. In fact, companies like Providian are capitalizing onnon-prime customers by charging excessive interest rates. However, these tactics including poorcustomer service have backfired on Bank One when the company lost 69.4 billion due toconsumers that closed their accounts. As a result, Bank Ones stock dropped from 63.00 dollarsper share to 30.00 dollars per share (Weber & Palmer 2000). In contrast, Weber and Palmer(2000), claim that because Providian has capitalized o...

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