On April 12, 2012, Hawaii sued Bank of America, Chase, Citi, Barclays, Capital One, Discover, HSBC, and their subsidiaries, “claiming that the banks ‘slammed’ Hawaii credit card customers, charging them for products customers didn't need and that the companies never provided.” The Hawaiian government alleges that the banks used “‘predatory tactics to sign up customers for services they either don’t want or don't qualify for,’ and the companies charged their customers ‘without their knowledge or consent,’ according to a press release issued by the Hawaii attorney general's office.” According to the Attorney General, David Louie, “You don't know that you're enrolling, but they say, 'Oh you just enrolled,' okay, and now they've put a charge on your credit card.” The banks’ telemarketing departments may have charged customers an average of $150 in the form of small charges.
It is a conflict of interest for credit-card companies to both administer the accounts and be the source of charges because if there is a dispute on a given charge the company can simply refuse to take off the charge. We accept the conflict of interest to the extent that a credit-card company charges customers to administer the accounts because that is a service provided. This rationale is missing where the companies use telemarketers to sell optional products, including additional services. Hawaii alleges that the companies put charges on their respective customers’ credit-cards without having secured permission. Should a customer find out and complain, the company would be resistant to removing the charge—presuming as per its financial interest that the customer had approved of the charge. In such a dispute, the company has an unfair advantage—essentially being a party to the dispute and the umpire. The company is acting as the card’s administrator and a vender who charges the card.
In his theory of justice for the city, Plato argues that each part ought to do only its own job. The ruler, rather than the businessman, provides the reasoned-based order on the city as a whole. Businesses are oriented to satisfying particular appetites. In the case of the credit-card companies, two distinct roles are being performed when only one fits with the desire being satisfied by providing the cards. Put another way, buying an ice-cream cone satisfied one desire, whereas being able to use a credit card (i.e., regardless of the particular substance of a given purchase) satisfies another. It is unjust in Platonic terms for a credit-card company to charge for particular products or services, rather than charging only for administering the cards. Besides more than one job being attempted—as if an arm trying to do its own work and that of a leg—the two jobs are incompatible in that the customer can be exploited.
Therefore, as a matter of public policy, American legislatures might consider giving credit-card customers the authority to unilaterally remove charges sourced in the credit-card company—excepting the charge for the administration of the card itself. The customers could then counter the temptation on the bank to be both party to a dispute and its initial decider. Given the costs involved when a customer sues a credit-card company, the role of first decider should not be trivialized. Should a customer remove a charge for an optional product, the company could remove or pick up the product. My point is that putting customers on a level playing field would stop the companies’ conflict of interest from potentially harming the customers. Simply put, it is not fair to be subject to one entity—business or person—being both defendant and judge.
Bonnie Kavoussi, “Hawaii Sues Bank of America, Chase, Citi, Others For Deceptive Credit Card Marketing,” The Huffington Post, April 13, 2012.