Credit card issuers must follow the rules. Many don't.

The Scope of the Problem

Americans collectively carry more than a trillion dollars in credit card debt. Behind every account is a contract, a billing statement, a payment history, and a stream of fees and interest charges — and behind those are federal and state laws that issuers, servicers, and debt buyers are required to follow. When they don't, consumers have leverage.

Common Credit Card Abuses

1. Improper Fees and Interest Charges

The Credit CARD Act of 2009 places strict limits on late fees, over-limit fees, and penalty interest rate hikes. Issuers must give 45 days' notice before significant changes, must apply payments above the minimum to the highest-interest balance first, and cannot impose fees that exceed the underlying violation. Violations are common — particularly with introductory-rate balance transfers and promotional financing.

2. Misapplied Payments

Payments wrongly applied to the wrong balance, posted late, or split improperly across promotional and standard balances can trigger interest charges that should never have accrued. The Fair Credit Billing Act (FCBA) gives you the right to dispute billing errors in writing and requires the issuer to investigate.

3. Time-Barred ("Zombie") Debt

Every state has a statute of limitations on credit card debts — typically three to six years from the date of default. After that window, the debt is "time-barred" and a creditor cannot win a lawsuit on it. But debt buyers regularly sue on zombie debts anyway, hoping consumers won't show up to court or won't know to raise the defense. A single small payment or written acknowledgment can reset the clock in many states.

4. Lack of Standing and Chain-of-Title Problems

Charged-off credit card accounts are sold and resold between debt buyers, often with incomplete paperwork. When a debt buyer sues, they must prove they actually own the debt and can establish the amount with admissible evidence — not just a printed statement and an affidavit. Many cases fall apart on these evidentiary problems alone.

5. Forced Arbitration and Class Action Waivers

Most cardholder agreements include arbitration clauses that block class actions. These clauses can sometimes be challenged or, in the right circumstances, used strategically against the issuer.

6. FCRA Reporting Errors

Issuers must accurately report account status to the credit bureaus and must investigate disputes promptly. Re-aging accounts, reporting paid debts as unpaid, or failing to correct errors after a dispute can give rise to claims under the Fair Credit Reporting Act.

Your Rights

• Truth in Lending Act (TILA): requires clear disclosure of APR, fees, and terms.
• Credit CARD Act: limits fees, rate hikes, and unfair payment-allocation practices.
• Fair Credit Billing Act: gives you the right to dispute billing errors.
• Fair Credit Reporting Act: requires accurate credit-bureau reporting.
• FDCPA: applies when a third-party debt collector takes over the account.
• State law: statutes of limitations, usury caps, and unfair-practice statutes.

What to Do If You're Being Pursued

1. Do not ignore court papers. Failure to respond results in a default judgment.
2. Do not make a partial payment or acknowledge a time-barred debt in writing without advice.
3. Request validation of the debt in writing within 30 days of first contact by a collector.
4. Keep a log of every call, letter, and email — date, time, who, what was said.
5. Talk with someone who knows the law before you sign anything.