Can the stores you choose to shop at indicate whether or not you may default on your credit card?
And regardless of your answer to the first question, do credit card companies have a right to ?profile? their customers based upon where they have used their card, either by zip code, or by the type of establishment that it was used in?
Apparently hundreds of thousands of consumer credit card customers accounts have been hit with credit limit reductions, interest rate hikes and even had the accounts closed based upon their spending and loan data, including where they shopped, what they purchased, who they purchased it from and who held their mortgages.
A recent report conducted by the Federal Reserve Board detailed the profiling but pointed out that it was relatively rare and it affected only a small number of card users.
Among the shopping practices that triggered the negative account changes were
? Location of where the transactions were made
? Identity of the merchant
? Type of credit card transaction
? Identity of the mortgage lender
The types of consumer behavior that could trigger the credit card changes included changes in spending habits for example, shopping at discount stores or pawnshops if you had not shopped at those types of establishments previously or even if your mortgage lender was having trouble and you lived in a neighborhood with many foreclosures.
Members of Congress have had concerns about these questionable practices even inferring that they might be ?profiling? or targeting certain groups for different treatment or ?redlining? a practice that insurance and mortgage companies engaged in during the 1960?s and 1970?s in order to keep minority groups from purchasing homes in certain neighborhoods. The Federal Fair Housing laws have long since outlawed ?redlining? when it comes to mortgages and home sales.
Read the whole story at Fed: Credit companies admit profiling credit card users.