Re: Lying on credit card application to get credit cards

Posted by Frasier (64.203.129.86) on January 26, 2004 at 20:28:39:

In Reply to: Lying on credit card application to get credit cards posted by Niles on January 26, 2004 at 16:25:43:

Credit card companies make a lot of money lending to people with unverifiable incomes, but who have good FICO scores and pay their bills. They’d risk losing all those customers if they started prosecuting people who lied on the applications about income and employment. You know there is a reason they don’t “verify” income and employment. They could verify, just like they do with mortgage loans, but they purposefully don’t on credit cards. They don’t want to know where people get the money to pay them (drug dealers, gamblers, underground economy people, etc.) If your FICO score says you’re good, then you get the card. As long as you didn’t lie about your name or social security number, you’ve got nothing to worry about regarding fraud over income and employment. They can’t selectively charge fraud on only those who default while continuing to do business with others who’ve similarly lied on the applications, but who are current with their payments. That would be “discriminatory” and would lead to, you guessed it, class action lawsuits. In other words, they can’t cry “fraud” on only people who can’t pay, while concurrently making huge profits on all the other liars who do pay profitably.

They’ll charge the account off to bad debt and you’ll get the normal collection activity reported here. The only time you’ll ever hear fraud mentioned is from collection agencies that buy debt, and they bring it up to scare people into paying, but they have absolutely no standing to charge fraud since they didn’t originate the account.

This scenario has also been addressed regarding pre-approved cards and bankruptcy…
“Until such time as the losses attributable to bankruptcy approach or exceed the cost of
determining credit worthiness at the time of issuance, the Court believes issuers will
continue to issue pre-approved cards without any inquiry into the card holder’s ability to
repay the charges to be incurred by the use of the card. The losses they sustain are
merely part of their inventory, just as fresh vegetables are to the grocer – each realizes
that part of their inventory will be lost, the grocer to spoilage and the card issuer to
bankruptcy. Recognizing this inevitability, each makes sure the price they charge will
more than make up for such loss in order to attain the anticipated level of profit.”
Household Credit Services, Inc. v. Walters, page 654.

Follow Ups:

Post a Followup