Would someone please tell American Airlines to stop its deceptive “hold” policy for tickets?

Another day, another person duped by American’s 24-hour “hold” policy.

What’s American’s deceptive “hold” policy? I’ll explain in a minute.
Read more “Would someone please tell American Airlines to stop its deceptive “hold” policy for tickets?”

Credit card bill has an enormous loophole that could hurt travelers

The Credit Card Accountability Responsibility and Disclosure Act of 2009, which is expected to land on the president’s desk later this week, promises to help consumers by prohibiting unfair, misleading and deceptive practices in the credit card market. But those protections may not extend to international travelers.

The problem: While the final bill clamps down on exorbitant foreign exchange fees, it gives credit card companies a license to continue pursuing a parallel fee the industry has been quietly developing.

Here’s the relevant language in the bill:

(3) REASONABLE CURRENCY EXCHANGE FEE- With respect to a credit card account under an open end consumer credit plan, the creditor may impose a fee for exchanging United States currency with foreign currency in an account transaction, only if–

(A) such fee reasonably reflects the costs incurred by the creditor to perform such currency exchange;

(B) the creditor discloses publicly its method for calculating such fee; and

(C) the primary Federal regulator of such creditor determines that the method for calculating such fee complies with this
paragraph.’.

In other words, foreign currency exchange fees may only be imposed in an account transaction if the fee reasonably reflects costs incurred by the creditor and the creditor publicly discloses its method for calculating the fee.

Here’s the problem. Credit card companies are quietly shifting away from currency exchange fees. They’re replacing them with foreign transaction fees, which cover any purchase made across the border — even if it’s in dollars.

These fees are not covered by the bill.

For example, one reader was recently hit with a mysterious three percent fee on her Citibank card when she traveled to Ecuador. The official currency of Ecuador is the greenback. I asked Citi about the fee, and a company spokesman clarified.

The three percent foreign exchange transaction fee is applied to an account regardless of currency at point of sale to all transactions made in a foreign country. This encompasses a foreign purchase that is either converted into US dollars or a foreign purchase in US dollars.

So even if there’s no money to exchange, the credit card company still tacks on a three percent fee on every cross-border purchase. No reasonable person who reads the Credit Card Accountability Responsibility and Disclosure Act of 2009 would conclude that these transaction fees — which are separate from exchange fees — are addressed anywhere in the bill.

Credit card companies will be able to fly through this loophole with impunity before the ink has a chance to dry on the new law.

Congress can still tighten the bill to prevent this kind of abuse. Barney Frank, chairman of the committee on financial services, still has the ability to add language to the bill if it passes in the Senate today, as it is widely expected to.

This might be a good time to let the Congressman know that apart from soon-to-be-regulated foreign exchange fees, credit card companies should not have the ability to charge any surcharge for purchases made overseas.

These purchases don’t cost any more money to credit card companies, and they shouldn’t for us either.