Advertisement
YOU ARE HERE: LAT HomeCollectionsFixme

Judge Delays California's New Credit Card 'Warning' Law

June 29, 2002|From Associated Press

SACRAMENTO — A federal judge Friday temporarily blocked the implementation of a California law that would require the nation's biggest bankers to include credit card payment "warnings" in monthly customer statements.

The ruling, handed down by U.S. District Judge Frank C. Damrell, came three days before the law was set to go into effect.

A group of financial corporations, including Chase Manhattan Bank USA, CitiBank and MNBA America Bank, filed a lawsuit a month ago to stop the law, which would require the companies to warn customers about how long it takes to pay off credit card balances by making only the minimum monthly payment.

The ruling came as a shock to consumer groups, which said the credit card companies never raised any concerns before, even though they participated in designing the legislation.

"We're disappointed," said Hallye Jordan, spokeswoman for Atty. Gen. Bill Lockyer, named as a co-defendant in the case with the Department of Consumer Affairs. "A good consumer law is postponed as a result of the bankers waiting to file an eleventh-hour lawsuit over a law they helped negotiate."

At least a dozen corporate lawyers appeared in court Friday to argue that the law would interfere with interstate banking, which is illegal under federal law.

Howard N. Cayne, an attorney for the Washington-based firm representing the banks, said that because adding the warnings would be costly, banks would have no other choice but to increase their minimum monthly payments. States are not allowed to pass laws that interfere with monthly payment schedules or interest.

Damrell ordered both sides to research the issue and told the bankers to perform a cost-benefit analysis to prove the warnings would be burdensome. The parties will turn in their reports in October and the case will be heard Nov. 8.

Advertisement
Los Angeles Times Articles
|
|
|