But the new head of the Consumer Financial Protection Bureau said that will stop as soon as possible. According to a report from Fox Business, CFPB boss Elizabeth Warren, just a few weeks after her appointment by President Barack Obama, spoke before 400 members and guests of the Financial Services Roundtable in Washington, D.C., and promised swift action.
Warren vowed to limit confusing language and specifically singled out obscure provisions that may lead to consumers taking additional credit card debt as a result of late fees and or other penalties.
"In fact, there’s a new epithet: fine print," she said, according to Fox. "I understand that some of you call it 'mice type.' Where I come from, nobody calls fine print, hidden fees and surprise penalties 'negotiated contract terms' or 'innovations.' On a polite day, my brothers in Oklahoma call that kind of stuff 'garbage.'"
Warren urged banks to adopt a new approach to credit contracts, the report said. She also suggested that she may be persuaded to lighten regulation if lenders work with her, telling them that their new first principle is "fair treatment for customers."
If her proposals are followed, contracts would clearly spell out all interest rates for credit card debt, penalties, and the gifts or rewards that may come with the card, in addition to any other terms, the Fox report said. These changes are designed to allow consumers to better understand the agreements into which they are entering, and what would happen if they breached that contract.
Warren, who is a Harvard Law School professor, has long been an outspoken critic of lending practices, and her appointment was something against which the banking industry lobbied heavily. Her position was created as part of the Wall Street Reform and Consumer Protection Act that led to the overhaul of many of the federal laws related to the banking and lending industry. Her primary mandate is to ensure that all lenders follow the new regulations, though she has some power to tighten or loosen them as she sees fit.