Did a former FBI director lie to Congress about his new boss's questionable business schemes?
Say you took out a credit card with a fixed 6.9% interest rate, charged up some items and faithfully made your payments on time. One month you discover that the bill has jumped to 29.9%. You call the company to complain, only to discover that they have imposed a “universal default clause,” which means that because you were a day late on your water bill, your credit card interest rate has now quadrupled. Legal? Yes. Fair? No.
In a 2004 survey published in Card News, an industry newsletter, MBNA was first on the list of 20 major banks with universal default clauses. The info on MBNA comes through Phillips Business Information, Inc., which Lexis describes as more than 70 newsletter providing “the news and analysis that is critical to professionals in these industries.”
In addition, the Consumer Affairs website carries a story about all the consumer complaints against MBNA in connection with its universal default clauses.
So why did Louis Freeh, now Senior Vice-Chairman for MBNA, tell Senators at a Congressional Hearing on Tuesday that “MBNA does not practice universal default”?
Did the industry news get it wrong? Are MBNA's customers making up rate hike stories? Has MBNA done a sudden, unannaounced about-face? Does Freeh not know how his business works? Or is Freeh unwilling to tell the truth about MBNA's high-profit scam?