Giving Credit Where Credit is Due

By Mark David Blum, Esq.

Recently Drivers Licenses were subjected to a new set of rules to assure that licenses can be used as legitimate forms of photo identification. Efforts are underway to assure that each license is issued only to a citizen or a legal non resident. Failure to have such a license could harm your liberties and impede your freedom to move about the country.

Now the shift has gone to credit cards. Democratic Sen. Chris Dodd this week added a new provision to the housing bill that calls for the tracking of all credit-card transactions and their reporting to the IRS. Arguing that doing so will help capture businesses avoiding IRS payments, in reality now our government will be continually apprised about our buying and spending habits. Big Brother just gave way to Totalitarian control and Fascist State oversight.

Senator Dodd is not the only one monitoring your credit transactions. CompuCredit found themselves at the wrong end of a lawsuit filed by the government. The allegations are that CompuCredit was reducing a customer’s credit score based on the types of transactions in which they engaged. For example, customers who used their cards at tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices found their credit scores reduced. The Federal Trade Commission and the Federal Deposit Insurance Corporation is after CompuCredit for hundreds of millions of dollars in fines and penalties.

As an American, I am confused. My government has enabled itself to monitor my credit card transactions to hunt for tax dollars. When private companies monitor credit for capitalist and industry-wide standards, they are prosecuted by the government. I am lacking a certain understanding of how these two policies are being rationalized by the same body of politicians: How does the government justify tracking my credit card transactions while at the same time punishing private companies for doing the very same thing.

Credit cards are becoming the bane of society. Once upon a time, credit cards were reflective of a person’s credit rating and ability to access money when they were temporarily short of cash. Over the years, credit cards have shifted from a cash-alternative to a mandatory requirement for transactions. Hotels, car rentals, reservations, online purchases, utilities, and any hope of getting any type of loan or be taken seriously in the business world all require the presentation of a credit card.

The role credit cards play in society has so overtaken the cash world, that banks created a new animal. Debit cards, which were nothing but access to cash machines were given a new look. Cards were given the appearance of regular credit cards including a Visa or Mastercard logo on it. Still the card was limited by the account balance and daily withdrawal limits. In doing so, banks gave to poor and low income persons the same privileges and lifestyle freedoms available to credit card holders. The only trick the customer needed to know was to tell the merchant that the card was ‘credit’ and not ‘debit’ as the fee is paid for by the merchant with the former, and the latter by the customer.

For the past several years, it has been the wild west in the credit card world. Debit cards were interspersed with credit cards with no real distinction between; at least not to the stranger to whom the card is being presented.

Nowadays, the world is changing. In addition to the government now tracking all credit transactions, but companies too are shifting away from accepting debit cards in lieu of a credit card. Recently, I had a client who was a five year corporate customer of Enterprise Rent a Car. After all the years of using the debit card instead of a credit card, Enterprise shifted its’ corporate police to accept only credit cards. Debit cards are only now accepted if the customer antes up a $300.00 cash deposit and brings in bills and other proof of residence. This is a corporate customer: I can only imagine how Enterprise treats the poor who don’t even have debit cards. It is bad enough the company treats those without credit with utter disrespect, but to ignore a debit card shows that the market is failing. Companies like Enterprise are shrinking their customer base to only those who can pay higher premiums. Perhaps this is why credit card companies are lowering credit risk based on spending habits. I wonder how much you lose by doing business with Enterprise Rent A Car. Perhaps the Attorney General should peek into the situation on how the poor are being treated.

For at least the last ten years I have personally argued strenuously to people to get rid of credit cards. Interest rates are not worth it when the bulk of your transactions are small dollar deals that could be covered by debit cards. Doing so enables folks to live within their means. Credit card companies and the banks that supply them are not in the business of charity and in the end, credit cards are huge money makers for them.

I have done well without credit cards. Living in a cash economy I get a certain amount of liberty where I know Senator Dodd is not monitoring my spending and the credit card companies are not passing moral judgment on my lifestyle. It made for great fun during a recent audit.

It is disgusting that the private companies are rating customers by spending. It is beyond the pale and a grave and gathering threat if our government can now be monitoring with computers and algorithms our lifestyles. How long before morality police show up? Does the government have the right to know this information? Where is the constitutional line that the government cannot cross – even if it is to fund the illegal war in Iraq?

Ultimately I am but a lone voice. Laws like that proposed by Senator Dodd are a clear and present danger to American privacy. Companies like Enterprise should be investigated for their treatment of the poor.

Sadly, I cannot in good conscience object to private companies using my spending habits to rate my credit. Doing so would violate my hard line principle of free market capitalism. I always have the right to vote with my feet.

Besides, I think people should be punished with lowered credit rating if they show transactions with drug dealers, terrorists, prostitutes, and Enterprise. But my government is prosecuting the wrong parties. The credit card companies should not be in the U.S. Attorney’s crosshairs. That place should be reserved for Senator Dodd for violating his oath of office.

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