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#194957 - 05/27/04 09:07 PM BankCard Question
BamaLaw Offline
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BamaLaw
Joined: Apr 2004
Posts: 98
I am an attorney but I am relatively new to compliance and am still learning where to go to find answers to "new" questions that I've not previously encountered. Any help with this will be greatly appreciated.

Question: We have a BankCard customer who has been artificially inflating his credit limit up to 2-3 times his actual limit by making multiple large payments to his account in a given month, thus giving himself a sizable credit balance. Subsequently, he makes charges and then several of the checks with which he has made these payments have been returned NSF. Of couse, this then puts him significantly over his credit limit. BankCard, for obvious reasons, is wanting to close the account and has asked if they can. So...Can they?

There is nothing in our BankCard agreement that addresses this situation either directly or indirectly. (something that we should certainly address during our next "change in terms.)

I find nothing in Reg. Z that addresses this either directly or indirectly. Am i missing something?

The Credit Card Act in our state does not address this either directly or indirectly.

Since I can find nothing that either authorizes us to close the account or prohibits us from doing so, from a safety and soundness standpoint, I am inclined to tell them to go ahead and close the account. Can anyone suggest somewhere else for me to look or else cite some authority, either positive or negative, that addresses this situation?

Thanks in advance for your help.

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Lending Compliance
#194958 - 05/27/04 09:33 PM Re: BankCard Question
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
How about terminating the account for over the limit violations and excessive number of NSF payments and send him an AAN to that effect.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#194959 - 05/27/04 09:41 PM Re: BankCard Question
BamaLaw Offline
Member
BamaLaw
Joined: Apr 2004
Posts: 98
Thanks for the suggestion. That's basically what I was thinking. I just wanted to hear it from someone else.

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