Evil Credit Card Companies

Normally I am a laissez-faire capitalist. Most of the time, I am happy to let businesses to things without regulation or control, because political controls have a habit of causing very nasty side effects. But I draw the line at deliberate, premeditated emotional manipulation:

"...Tiff recalled. “And then we talked for over an hour about my problems and raising kids. She was amazing. She was so similar to me. She gave me her direct number and said that I should call her directly anytime I had any questions or just needed to talk about what was going on.”

Over the next three years, Tiff paid off the entire $28,000 she owed Bank of America and spoke regularly with Tracey, she said. ...

One Bank of America executive acknowledged that Tiff ... probably could have cut her debt in half just by asking. Much of what they’re paying, after all, is fees and interest that Bank of America itself tacked on.

“Some cardholders are not as savvy as others,” said Tony Allen, a company spokesman, ...

I asked Tiff if she ever asked Tracey to write off the late fees and the interest charges.

“Oh, no,” she told me. “She was so kind to me. How could I ask her for something like that?”"

Everyone but the most rabid Libertarians agree that government needs to prevent fraud. This is worse than fraud. It is, like fraud, an insidious alteration of people's minds, getting them to agree to something that they would clearly not do if they were well-informed. But when people have been a victim of fraud, they learn from the experience and they can use the court system to recover their losses. When people are the victim of this kind of thing, the never learn how they have been abused and they could never recover any damages in court.

I feel the same way about most kinds of advertising, but that's a topic for another day.

How can we prevent this? I don't know. Direct regulation or oversight would be very difficult and expensive, and would be bitterly opposed by the industry. Ideally, people would be smart enough so that this kind of thing wouldn't work, but that will never happen. But there has to be some way to stop these kinds of shenanigans. If you routinely suck money away from people who are trusting and emotionally open, then society will become a much nastier place.

Read the whole article if you have time. It has lots of interesting facts about how credit card companies know about and manipulate people. For example, their data show that that the purchase of premium bird seed is one of the most reliable indicators of creditworthiness.

I actually have no complaint about building up profiles of people like this. They have a right to judge you based on the things you purchase. When their credit decisions are more accurate, it means that good people get to borrow more cheaply and less money is wasted on deadbeats. That is efficient, and good for society.