MBNA America is one of the powerhouses of U.S. credit card lending. The Wilmington, Delaware-based bank made $79.5 billion in credit card loans to 54.3 million consumers in 2002, ranking it just below international conglomerate Citibank.
Not only does MBNA issue cards under its own name, it issues "affiliate" cards for hundreds of retailers, trade groups, alumni associations and other organizations - so even if you dont think you have a relationship with MBNA, you might.
If complaints coming in to ConsumerAffairs.com are any indication, MBNA is also one of the more aggressive enforcers of "risk-based repricing" or "universal default" contracts, in which a credit card lender scans consumer credit reports frequently and raises interest rates on existing balances if it doesn't like what it sees. (See "MBNA Turns Up the Heat" for a more detailed discussion.)
If something as small as an unexpected doctors bill goes unpaid, or a consumers overall debt load goes up, it can mean huge changes in a consumers financial picture. In one case reported to ConsumerAffairs.Com, an MBNA customers credit card payments shot up from $100 per month to $300 per month when MBNA decided that it didnt like other factors in the consumers credit picture - despite the fact that the consumer had never gone over her limit or been late with payments.
Driven by consumer anguish, a few legislators have begun to look more closely at banning this practice (story). Across the big pond, the U.Ks Office of Fair Trade has begun an investigation of MBNAs European affiliate, looking into what it calls alleged unfair contract terms and studying how it establishes late, overlimit and returned check fees.
Meanwhile, MBNA America is doing all it can to preserve its prerogatives, including making substantial contributions to the Bush re-election campaign. In fact, according to research by The New York Times, MBNA is now the Bush camps largest supporter, climbing over the record previously set by Enron Corp.
Consumers Have a Choice?
As with the rest of the financial industry, MBNAs position is that consumers who end up with high interest rates had the choice to back out.
We always pre-notify the customer as to the conditions that are going to change, said MBNA America senior executive vice president Jim Kallstrom last June in testimony before the House Subcommittee on Financial Institutions and Consumer Credit. We always give them the opportunity to pay off the account at the existing rate and close their account.
But scores of consumers who wrote in to ConsumerAffairs.Com say they never got the notification of pending rate increases that the bank promised to provide, leaving them with balances they feel theyll never be able to pay off.
Meanwhile, customers who call to complain about the practice have said that they frequently encounter rude, confrontational customer support staff who seldom use their discretion to lower rates to anything like previous levels. Even if they do work things out with MBNA staffers, complainants say, in some cases agreements change from day to day depending on who they speak with at any given point.
MBNA's Response
And what does MBNA say about the complaints weve received?
Nothing so far. ConsumerAffairs.Com contacted MBNA America for comment, but got no response. MBNA, if youre listening, wed still like to hear what you have to say.
