SACRAMENTO — The author of California's newly instituted credit card disclosure law Wednesday released a report showing that more than half the banks and savings and loans surveyed are either ignoring or only partially complying with the law's reporting requirements.
Assemblyman Rusty Areias (D-Los Banos), chairman of the Assembly's Governmental Efficiency and Consumer Protection Committee, said many of the financial institutions "do not want to comply" with requirements to list interest rates and terms because of the high interest rates they charge consumers.
Most major institutions like Bank of America, Citicorp Savings, Wells Fargo and Security Pacific National Bank are in compliance, Areias said. The biggest problem involves small regional banks or out-of-state banks doing business in California, he added.
The law, which took effect Oct. 1, requires that all credit card applications mailed to consumers in California disclose interest rates, annual fees and "grace periods" that are allowed before interest charges kick in.
In some cases, banks and savings and loans may be in compliance even if they do not publish specific credit terms on their applications as long as they provide a box that can be checked by consumers who want the information mailed separately.
The survey was conducted by Consumer Action, a San Francisco-based consumer advocacy group. Ken McEldowney, executive director of the group who appeared with Areias at a Capitol news conference, said letters were mailed to about 80 credit card issuers Oct. 5 asking for credit applications.
Of the 45 companies that answered, only 22 provided all of the key information. Eighteen provided no information about their interest rates, annual fees or grace periods, McEldowney said.
The legislation, which was signed by the governor in September, 1986, did not contain penalties for firms that violate the law.
"Frankly, we didn't expect the problems we are having with compliance," Areias said.
Areias said he has asked the attorney general's office to consider filing charges against the institutions under the Unfair Business Practices Act. He said if current law does not provide adequate penalties, he will seek legislation providing for the removal of the state charters for banks that do not comply with the law.