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Hawaii takes on credit card fees

By Janna Herron · Bankrate.com
Monday, April 16, 2012
Posted: 5 pm ET

Hawaii is making waves over credit card fees.

The Aloha State is suing seven major banks and credit card issuers over "slamming," according to a release from the Hawaii state attorney general last week.

The lawsuit claims that Bank of America, Barclays, Capital One, Chase, Citi, Discover and HSBC billed cardholders for products that they didn't request or that did not provide the benefits promised.

One example is "payment protection," which is supposed to pay minimum monthly payments in certain situations, such as a job loss or medical emergency. The state attorney general said Hawaii cardholders weren't told about restrictions or limitations, and, in many cases, never qualified for the product.

The state seeks up to $10,000 per violation from the credit card companies. The funds would go to consumers and the state's general fund.

Similar slamming lawsuits have appeared in other states. West Virginia and Capital One settled a suit over misleading credit card fees for $3 million in January. Discover settled a suit with Minnesota for $2 million last year and is in the middle of lawsuits or investigations by West Virginia, Missouri and California.

It's heartening to see local government getting Joe Everyman's back. This year, we've seen the federal government give issuers the upper hand in two cases of credit card contracts and fees.

The first big loss came in January when the Supreme Court upheld arbitration clauses in credit card contracts. Essentially, a cardholder couldn't take an issuer to court if he or she signed one of these clauses that stipulated all disputes must be resolved through arbitration. Several studies have shown that issuers overwhelmingly win arbitration cases.

The second blow to consumers was delivered last week when the Consumer Financial Protection Bureau put out a proposal that would OK processing application fees for credit cards without limits. The federal watchdog said any fees that issuers charged before a credit card account was opened were not subject to fee restrictions under the Credit CARD Act.

What do you think about these cases? Do you support them or not?

Follow me on Twitter: @JannaHerron

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