We’ve all seen letters, emails or text message from banks trying to entice us to increase our credit limits. They come in a range or forms from Congratulations, you’ve been pre-approved, to Increase your credit limit in time for Christmas. But one trait common to all these offers is that they’re trying to get customers to take out credit they wouldn’t normally have asked for and, in some cases, credit they can’t afford.
Consumer Action is pleased that banks and other credit providers will be banned from making these unsolicited offers from 1 July 2012—unless the bank has requested and received a customer’s permission to send them. The new law won’t stop people requesting and being granted a credit increase, it just means they won’t be bombarded with offers.
But rather than deal with the new laws in the spirit they were intended, banks have been rushing to get customers’ permission to continue to send these offers, with several using misleading messages to do so. Indeed in the few short months since the legislation was enacted, both the Commonwealth Bank and Westpac have raised the ire of ASIC which has made them remove adverts.
We’ve also made complaints to ASIC about messages seeking consent sent by Westpac, as well as text messages sent by Citibank. The law provides that any message seeking consent must:
- state that the consumer has a discretion whether to apply for any increase of the credit limit;
- state that the lender has a discretion whether to grant any increase applied for;
- state that the consumer may withdraw the consent at any time;
- seek the consumer’s consent only in relation to whether or not to receive credit limit increase invitations.
Lenders should also not mislead consumers into thinking that unless they provide their consent, they won’t be able to provide it in the future, or they won’t be able to seek higher credit limits at another time.
If you’ve received a letter, email, text or onscreen pop-up asking for your permission to be send credit limit increase offers please send us a copy at firstname.lastname@example.org.
In the meantime remember, the new law won’t stop you from requesting or being granted a credit increase—so don’t be taken in by industry scare tactics.