I've posted a couple of times (in May and June) how many credit card solicitations I've received in any given month. So when I saw this article tonight on MSNBC that promised new FTC regulation that makes opting out of credit card solicitations more obvious, I had to post on it right away. Here's what's going on right now:
Pre-approved credit card applications flood mailboxes around the country every day, and while it might seem impossible -– even more are headed to U.S. homes this year than ever before, by one measure. According to Synovate, which tracks the industry through consumer surveys, an estimated 1.4 billion applications were sent in the first quarter of this year. That’s 5.8 applications per household every month.
Here's the good news:
Starting in August, banks that mail pre-screened credit card applications to consumers must include a prominent notice advising consumers how to get off their mailing list. The new Federal Trade Commission regulations, mandated by the 2003 Fair and Accurate Credit Transaction Act, took effect Aug. 1.
Starting immediately, each mailing must include a notice in bold type on page 1 listing the phone number and Web site that allows consumers to cut off credit card solicitations. Consumers who call 1-888-5OPTOUT or visit www.optoutprescreen.com can “opt out” of most mailings.
But this really isn't new news:
But the phone number, and the Web site, are actually old news. Congress gave consumers the right to opt out back in 1996. The Fair Credit Reporting Act of 1996 required the nation's credit bureaus to set up the opt out system, and to notify consumers of their rights “clearly and conspicuously,” said Katherine Armstrong, a spokeswoman for the Federal Trade Commission.
But the old way has been ineffective:
But the opt out option wasn’t clear and conspicuous enough, consumer advocates say, since many consumers have no idea that alone would stop the junk mail. A study conducted by the Federal Reserve in 2004 indicated only 6 percent of consumers had signed up to opt out.
The opt out rule was supposed to make credit card pitches more targeted, and reduce the amount of junk mail. Instead, said Brent Stratford of Synovate, the number of applications mailed home has risen steadily almost every year since.
So Congress decided to do something about it (finally!):
Lack of participation led Congress to mandate the more obvious notification notices in its 2003 update to the Fair Credit Reporting Act. And this time, the rules are much more specific, right down to the font size and location of the opt out on the piece of mail.
The rules might seem overly detailed, said Chris Hoofnagle, a spokesman for the Electronic Privacy Information Center. But they are necessary because companies keep trying to evade the spirit of consumer protections, he said.
The credit card companies hate this (of course):
For its part, the credit industry says consumers are aware of their rights, and points out that 6 percent participation means the system is working.
“It’s a discredit to consumers, assuming they don't know anything about it,” said Norm Magnuson, spokesman for the Consumer Data Industry Association, Inc., a lobby group for the credit industry. It maintains the list of consumers who opt out. “Consumers are probably more savvy than that.”
But it's going into effect. Now consumers will know about the easy option they have, though it won't stop everything:
Only a single phone call is required – or a single visit to the industry Web site – to stop the flow of pre-screened offers. It won’t stop all solicitations, however. “If you have an existing relationship with a company, they can still send you offers,” Armstrong said. Direct mail offers that don't go through the pre-screening process are also still allowed. But signing up for the opt-out system generally cuts down sharply on credit card offers, since the vast majority are pre-screened.
Unfortunately, there are other problems with the system:
But there might be another reason for any perceived lack of consumer participation: the process of opting out can be unnerving. Using either the telephone or the Web site, consumers must provide their Social Security Number and other personal information to get on the opt-out list. Since many consumers have been instructed never to hand over that number to anyone on the telephone or the Internet, it’s possible many consumers abandon the process half-way, the FTC's Armstrong says.
Still, the credit bureaus need the information to positively identify the person going on the list. Armstrong said. “It's the only way, as a practical matter…. to make sure they have the right consumer,” Ferguson says.
But others say the opt-out system should use another method for identifying consumers. "That is a serious flaw," said Rob Douglas, who operates PrivacyToday.com. "Here we are trying to teach consumers not to be providing SSNs and that is what they ask for."
Yet, it's a step in the right direction -- and a good method for eliminating unwanted credit solicitations.
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