Credit Cards

Before the credit card industry came in, cash and cheques were the most widespread modes of making payments for purchases and services. Despite the fact that the credit cards have been in use for decades now, it is hardly surprising to note that most people are still not very comfortable at handling the plastic money. This is primarily owing to the fact that they are yet to give up the traditional practice of making payments by means of cash and cheques.

In a way, credit cards are comparable to the bills of exchange (drafts) and letters of credit (L/C). Credit cards were first launched in the United States in the 1920s and the hotel chains and oil firms were among the first business establishments to use them. These plastic cards were followed by the Diners Club card that came in 1950 and after that the American Express cards launched in 1958. A year later, in 1959, the Bank of America entered the credit card market with its BankAmericard. Soon, by the middle of the 1960s, the Bank of America also started granting licenses to other banks in the United States to issue the BankAmericard. The international financial community accepted a universal credit card system in 1977 called Visa. Visa is actually owned by an organization whose members comprise financial institutions across the globe. Interestingly, Visa does not precisely provide any cards or offer monetary services either to the merchants or the consumers. Actually, every individual Visa member determined the terms and conditions, charges and the yearly interest rate that it offers its clients.

MasterCharge, which was launched by CitiBank of New York in 1967 as the 'Everything Card', was the precursor of MasterCard. MasterCard pioneered the credit card industry's first gold card business that was launched in 1981. In addition, MasterCard was also the first in the credit card industry to make use of a laser hologram on the plastic card with a view to check fraud. Again, in 1989, MasterCard launched the first credit card comprising a signature section that was tamper proof and ensured the security of the card holder. It is interesting to note that the stupendous success of credit cards surely goes on to prove the bearing the marketers have on the consumers on the whole. The marketing slogans such as 'membership has its privileges' offers an aura of dignity to the credit card holder, while 'it's everywhere where you want to be' brings in a sense of glamour. Similarly, the marketing slogan 'and the feeling of potency of master of the moment' virtually compels us to accept as true that life without a credit card would be much less pleasurable and much more thorny.

As the credit cards became popular, so did the crimes related to it increased. Growing incidents of crime, fraud and other problems associated with the credit cards as well as the aggressive marketing of different plastic money by the banks expressly led to a legislation called the Fair Credit Billing Act of 1974. This was followed by numerous laws and regulations to protect the consumers using credit cards from different kinds of frauds and deceits.

In fact, till the 1970s not many specific laws pertaining to crimes related to plastic money existed simply because of the fact that there weren't enough credit cards in circulation. However, as the number of cards increased and the credit card companies began exploiting the plastic money users, the Congress as well as the different states of the United States was virtually compelled to enact new laws to look after and safeguard the interests of the consumers. It may be mentioned here that different laws were required to protect the consumers as the federal legislations passed by the Congress deal with the whole of the United States, while the laws enacted by the different states only pertain to occurrences in individual provinces. For instance, if a consumer residing in California has any problem with a credit card firm located in California, the laws enacted by the Congress as well as the legislature in California would be pertinent. However, several laws enacted by different states of the country are also pertinent outside the state provided credit card firms located outside the state are having business transactions with the local residents. On occasions, laws enacted by the states are more controlling than those passed by the Congress, while at other times it is the other way around. As it is not feasible to deal with the laws pertaining to credit cards passed by the 50 states of the United States, in this discussion we shall only focus and deliberate on the federal laws or legislations enacted by the Congress. In case, you are interested in learning about the laws in your state, it is advisable that you either pay a visit to your local law school library or the neighbourhood county law library.

In fact, there are three distinct planes of the federal laws pertaining to the protection of the credit card consumers. They include the laws enacted by the U.S. Congress, Federal Reserve Board regulations and the numerous court verdicts on different Acts, regulations and commentaries. Here is a brief description of each of these.

Laws enacted by the U.S. Congress:
These legislations are generally present in Title 15 of the United States Code beginning at Section 1601 and encompass the Truth in Lending Act (the key credit card law), the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and many others. Occasionally, collectively they are also known as the Consumer Credit Protection Act.
Federal Reserve Board regulations:
These regulations or bylaws construe the Truth in Lending Act and other legislation related to consumer credit. In fact, there are several hundreds pages of Federal rules which are also known as Regulation Z. The Fed also includes an Official Staff Commentary on Regulation Z.
Court Decisions:
In addition to the laws passed by the U.S. Congress and the Federal Reserve Board regulations, there are several hundreds of court verdicts that construe the Truth in Lending Act, Regulation Z and the Official Staff Commentary on Regulation Z.
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