You're 19? Here's $10,000

You're 19? Here's $10,000

Sun Herald
3 December 2000
By FRANK WALKER, Chief Reporter

THE NSW Government will ban signing up for credit cards over the internet after a survey revealed widespread concern at aggressive marketing.

Fair Trading Minister John Watkins said a two-week phone-in demonstrated some banks had a ``cavalier" attitude to letting people chalk up debts on credit cards.

Among callers last week were two 19-year-old women who a bank provided with credit cards with $10,000 limits which they spent.

A person on a disability pension managed to get cards from four major banks with credit totalling $30,000.

Mr Watkins said 1,100 people took part in the survey and results were disturbing. ``Callers revealed aggressive tactics on the part of lenders that, while not necessarily unlawful, have contributed to hardship or financial difficulties for many in the community," he said.

There was evidence of little or no scrutiny being given to many credit applications and even an incentive not to scrutinise them as commissions were paid for every approval.

``The calls showed whole families are hurt when one of them gets into credit card troubles," Mr Watkins said. ``It's quite clear the lending institutions are being irresponsible in the extreme in the way they provide credit."

Australians owe almost $16 billion on credit cards and personal debt is increasing by 18 per cent a year. Spending on cards is up 33pc over the past year, with the average person spending $6,000 on cards.

Banks have made $450 million in profit from credit cards this year and cards make up 7pc of their profits.

Mr Watkins said he was concerned that new laws on electronic transactions starting in February had given legal recognition to documents signed over the internet.

This would allow people not only to apply for credit cards and loans over the internet but for the banks' approval to be done online and people to sign up for credit online.

Mr Watkins warned the lack of a letter to sign or human contact could further reduce consumer protection and he has convinced the Government to exempt consumer credit from the new law.

Internet sales of loans and credit cards are booming and banks are pushing the process as it is cheaper for them to do business online.

Mr Watkins also plans to ban financial institutions from mailing people unsolicited offers of credit.

You wouldn't credit it ...

PHONE calls to the Fair Trading Department's credit hotline over the past week revealed:

* A man, 24, ran up a bill of $28,000 on 14 credit cards. When he finally realised he couldn't pay he went to his father for help. His father was furious banks had given his son so many cards but he covered the debts.

* A 32-year-old woman had a $30,000 limit on a store credit card. Her mother complained to the store but was told it could not legally refuse anyone wanting more credit. The mother paid the debt.

* A woman, 36, on a disability pension and with a 10-year-old child, got $30,000 in loans even though she has episodes of mental illness.

* A 21-year-old man chalked up $40,000 in credit card debts without any bank questioning his ability to repay.

* A person on a disability pension got credit cards from four banks with $30,000 credit.

* A bank lent a man $700,000 without his wife's knowledge. The couple had jointly signed for $100,000. The wife had never agreed to the extra loan.

* A man asked a bank to increase his credit card limit by $2,000. It agreed and two weeks later increased the limit a further $3,000 without his knowledge.

* A bank gave two 19-year-old women credit cards with $10,000 limits after they said they planned to travel overseas. The women did not travel, but quickly spent the limit on their cards.

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