The ink on the Credit Card Accounting Responsibility and Disclosure Act of 2009 isn't even dry, and yet there has already been a wave of articles warning consumers about the "new traps" — predatory practices, hidden fees and variable interest rates.
If their concerns are legitimate, it creates a strange paradox: financial institutions are spending millions of dollars trying to convince their customers and prospects that they are responsible, caring and trustworthy while they allegedly devise strategies to generate additional revenues from their customers with stealth fees buried in the fine print of their credit card contracts.
This highly charged situation calls for creative solutions. Regulators are trying to legislate clarity by micromanaging the content and wording of disclosures. This only reinforces the entrenched practice of lawyers complying with the letter of the law while skirting the spirit of it. Issuers need to create credit card contracts, monthly statements, and interactive guides that give customers an opportunity to make informed decisions and protect themselves.
Regulations that attempt to achieve disclosure through technical requirements — mandated language, typographic specifications and archaic usability formulas — needlessly complicate a good-faith effort to create integrated, informative documents.
Can you create a consumer credit contract on one page as President Obama requested? Yes you can. The lawyers will predictably be concerned about compliance. My answer is simple. Use market research to ensure that your employees, customers and prospects can understand the contract and statements. There can be no stronger defense if you are sued.
We need to make clarity, transparency and empathy national priorities and to help restore trust in our private and public institutions.
We have only ourselves to blame if we continue tolerating outrageously complex and confusing documents.