Law and regulation

Banks in Sri Lanka will reduce their credit card interest rates, an official from the 15-member Payment Card Industry Association of Sri Lanka says. “This decision has been taken after the Central Bank of Sri Lanka expressed concern last week that card issuers were not bringing down rates even though there was some margin available,” he says. According to the official, interest rates on credit cards have remained between 33% and 48% since December 2008. “The central bank asked for banks to lower rates to between 24% and 36%,” he adds. “Banks will follow this suggestion and bring down rates to a minimum of 24% to maximum of 36% beginning this January.” Sri Lankan banks issue some 1 million credit cards.

Bank Islam Malaysia Bhd will not absorb the planned service tax on credit cards that the government will impose next year, the Kuala Lumpur-based bank announced this week. In a statement, the bank said it already has offered other incentives for its credit card customers and does not see the need to absorb the tax. The Malaysian government announced in its 2010 budget it will impose a 50 ringgits (US$15 or 10 Euros) tax on primary credit cards and a 25 ringgits tax on supplementary credit cards. Previously, one other bank, Malayan Banking Bhd, had announced that it, too, will not absorb this tax. That announcement came during the same week the government announced that new credit and charge card holders next year will have to pay the service tax up front. However, existing cardholders will have to pay the tax on the anniversary date of when they received their cards. A survey from local business daily StarBiza also found that such banks as Citibank and RHB Bank were against absorbing the tax. The survey also found that banks are willing to waive annual fees or allow cardholders to use their reward points to pay for the tax.

Debt buyer Portfolio Recovery Associates (PRA) is the defendant in a class-action lawsuit filed by Atlanta-based law firm Webb, Klase & Lemond LLC. The case alleges that Norfolk, Va.-based PRA improperly subjected consumers to arbitration with National Arbitration Forum Inc. (NAF), a service it knew was biased in favor of creditors.

If the checking account's loss has been the prepaid card's gain, new overdraft regulations could kick that trend into overdrive.

Financial regulators in China plan to crack down on credit card-related crimes, the People’s Bank of China, the country’s central bank, announced Tuesday on its Web site. The central bank plans to work with associated agencies to remove print and Web advertisements authorities judge offer false information about credit cards. The bank did not offer more details. People’s Bank also plans to work over the next year with the Ministry of Public Safety to fight card fraud, and it plans to increase efforts to educate consumers about how to use cards. People’s Bank announced its plans after China's Supreme People's Court and the Supreme People's Procuratorate, a prosecutorial and investigative agency, announced a judicial interpretation this week that clarifies several laws concerning credit card fraud. Under a legal document scheduled to go into force Wednesday, card fraudsters could face at least 10 years in prison or even life imprisonment and fines of up to 500,000 yuan (US$73,200 or 50,500 euros) in cases that involve more than 25 counterfeit credit cards. China also could press charges against cardholders who intentionally delay credit card repayments for at least three months after an issuer sends a second notice.

Some 75% of U.S. households said they are familiar with new credit card industry regulations President Obama signed into law earlier this year, but they are divided on the new rules’ effect, suggest the results of a recent survey from Maritz Inc.’s Maritz Research subsidiary. The firm surveyed 2,666 U.S. adults online Oct. 8 to 14 to measure awareness of the Credit Card Accountability, Responsibility and Disclosure Act, which will restrict many credit card industry practices when it goes into full effect Feb. 22. Asked to weigh the “expected impact” of the regulations, 50% said they expected to feel no impact, while 17% said they expected a negative impact and another 17% expected a positive impact. Some 6% foresaw “significant positive impact” while 4% expected a “significant negative impact.” Six percent were unsure of the new rules’ effect. Some 42% of respondents reported seeing recent interest-rate increases on their cards, while 29% reported the recent notification of higher minimum payments, 28% reported recent credit-line reductions, 22% reported the recent imposition of new or higher annual fees, and another 22% reported recent rewards-benefit reductions. Some 40% of respondents said they tended to pay their credit card bill in full each month, while 60% tended to carry a balance. “I was surprised that consumers’ familiarity with the new regulations was so high, given the fact that many credit card issuers are still contemplating changes they will make in response to the law,” Rich Brose, senior director of strategic consulting for Maritz’s financial services group, tells CardLine. “It’s too soon to tell what consumers will ultimately decide, but the early returns show contrasting viewpoints on its effect.” Among other provisions, the law requires issuers to give cardholders 60 days’ warning of any interest-rate changes and prevents issuers from raising cardholders’ interest rates on existing balances, except in certain conditions.

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The new credit card law, enacted in the depths of a recession, cracks down on issuers' longstanding practices, but could also indirectly benefit the companies in an economic recovery.

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A much-anticipated government report on interchange finally appeared Thursday - and hardly seemed worth the wait.

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