Beware of Capital One Cardholder Agreement Changes

If you’re one of the millions of consumers who has a credit card account with Capital One, you may not have noticed that the company recently changed its cardholder agreement to allow new kinds of collection activity. The new version of the agreement allows collection activity that normally wouldn’t be permitted under many states’ laws.

You have to understand some nuance in debt collection law to then understand how this change might affect a debtor in a particular state. The first thing to understand is that as an original creditor, Capital One isn’t actually bound by the federal Fair Debt Collections Practices Act. That law only covers third-party collectors or debt buyers.

Because the federal law doesn’t cover original creditors, that means companies like Capital One can potentially get away with tactics like calling from a “spoofed” number (making your actual number look like a different number on caller id), sending mass texts, sending faxes to someplace like your workplace where someone other than you might be able to view the collection notice, or even in-person visits for collection purposes.

The good news for some creditors is that some states have adopted their own laws that are similar to the FDCPA that do cover original creditors such as Capital One. For example, California’s Rosenthal Act lists prohibited types of collection activity and bars original creditors from engaging in those activities.

What Capital One is doing with the revised cardholder agreement is basically attempting to change California law via contract. This attempt likely will be challenged, as it’s a general principle that businesses can’t limit their liability under the law by simple contract provisions. Courts oftentimes indicate this practice is against public policy and will refuse to enforce these kinds of contract provisions.

These contract changes will have very little effect on a state such as Ohio because even though Ohio has its own Consumer Sales Practices Act that contains provisions similar to the FDCPA, the state law then exempts the vast majority of entities that typically collect debt—financial institutions and medical providers. So, in Ohio, Capital One might engage in activity that would normally violate the FDCPA with impunity, as there are no laws that stop the company from doing so.

Finally, changes might have the greatest effect on the Telephone Consumer Protection Act. The TCPA prohibits collectors from using automatic dialing systems to contact debtors via cellular phone. The TCPA does not apply to consumers or debtors that have given their consent to be contacted in such a fashion. The debtor has likely given Capital One his or her consent for this type of contact based on the sweeping changes in Capital One’s Cardmember Agreement. This might not be the “express” consent contemplated by the TCPA, but it certainly muddies up the waters.

If you’re being harassed by a credit card company or debt collector, you can call Attorney Jeremiah Heck at (888) 726-3181” target=”_blank”>(888) 726-3181 to talk about what’s happening and whether a lawyer might be able to help stop the collection activities.