HSBC Watch News Release Forum Index
Forum Name: - Levitz
Topic Title: Levitz Debt Cancellation Fee
Fri Apr 08, 2005 12:37 am
With Levitz furniture, they have charged us for a debt cancellation fee that we never signed up for. Upon confronting the company and asking for proof they state they have verbal confirmation but have failed to provide a copy of the "tape" that they say they have. We have talked to repeated supervisors who assure it is getting taken care of but then when we try to call them back, they are on "vacation".
Fri Apr 08, 2005 3:58 pm
Cancellation contracts vs. insurance
(DCA = Debt Cancellation Agreement)
Household International was the last predatory lender to stop packing credit life insurance into contracts. Household, as a predatory lender, was indeed the final holdout on credit life. Now, since HSBC has a national bank charter, Household is at it again. Now called HSBC Finance Corporation, it is goodbye to credit life and hello to debt cancellation.
This is from the American Bankers Association:
In order for financial institutions to offer DCAs, they must have a national charter, or, alternatively, a state charter that grants automatic parity with federal banking statutes.
A DCA is basically the same as credit insurance in function, but generally without the insurance-side regulation (and the requirement in each state of some form of insurance license). A debt covered by a DCA can be canceled due to death, disability, unemployment, property loss, family leave, nursing home stay, critical illness, divorce and other factors, depending on what coverage the lender offers and the customer pays for. (Depending on the scope of coverage, DCAs may also be known as debt cancellation contracts or debt suspension agreements.)
Instead of paying insurance premiums, the borrower pays a bank fee; instead of death benefits being remitted by the insurance company to pay off the debt, the debt is canceled by the lender; and most importantly, instead of complying with the 50 different state regulators, lenders comply with OCCís rules.
Since 1964, and through later, notable court cases, OCC has insisted that such contracts are banking products and not insurance products, though some states have bucked that assertion.
The proposed regulationís language continues the favorable treatment and makes it clear that the agencyís insurance sales regulations would not apply to sale of these contracts. However, OCC's proposed regulation, published April 18, 2001, also contained some consumer protection measures that banks will have to examine before moving further into DCA products.
We monitor customer trends for possible violations of Regulation Z and other possible illegal actions.