The "Chase" and the "5/24" rule: An open discussion of credit discrimination

[Anonymous]

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@Anonymous wrote:

Darinox,

You're wrong, and I'll make one more attempt to explain why and then I'm done. Again, in order for legal discrimination to occur, there has to be disparate impact on a delineated class of people. Here's an example from my own real life experience:

Back in my corporate lackey days I spent five years as Director of HR for a rather large Wendy's franchisee. We had 51 stores and 1500 employees. I handled quite a number of cases. One of those cases involved a female employee filing a discrimination complaint with the Washington State Human Rights Commission against one of our store managers claiming he was treating her badly. She was right, he treated her like garbage. We won the case anyway. Why? because he treated everybody like garbage. Female, male, Black, White, Hispanic. It didn't matter. The guy was a complete and utter jerk. Because he treated everybody the same - badly - there was no disparate impact.

Chase is treating everybody the same.

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CAPTOOL, your points are excellent ones. 

I intend no disrespect to the OP, but I'm starting to feel as if we're being baited here.................

[StartingOver10]

I agree with hum above....we are being baited into a healthy debate

[Anonymous]

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@StartingOver10 wrote:

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@Darinox wrote:

Qualify - Chase sets different practices which would otherwise make you ineligible i.e. not able to qualify.

Okay let me makes this simple:

Credit discrimination is based on a variety of factors out of protected classes:

Credit discrimination is illegal. Under the Equal Credit Opportunity Act, a creditor can't discriminate in any credit transaction, including mortgages, against any applicant because of these factors:

• Race
• Color
• Religion
• National origin
• Sex (gender)
• Marital status
• Age, unless the applicant is not legally able to enter into a contract
• Receipt of income from any public assistance program
• Exercising in good faith a right under the Consumer Credit Protection Act.

The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act.

One of the dependent clauses of the Consumer Credit Protection Act states:

• Refuse to extend credit, or use different standards in determining whether to extend credit

=5 accounts different standard from other lenders which is based on something that is not rational. Therefore illegal => therefore considered as discriminatory practice though the lender may not have intentionally done it to discriminate but instead might have resulted later on.

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^^^Statement in red contains errors:

1. First, it is not '=5 accounts' that is causing your issue, it is the addition of 5 accounts within 24 months which has been defined by Chase as their definition of 'active credit seeking' or alternatively 'agressive credit seeking'. In your specific case, you have added 12 new accounts over the last 9 months so you meet the definition that Chase is using to determine the difference between credit seeking and 'aggressive credit seeking'.  It is their definition of the level of risk they are willing to tolerate with a new account.
2. Each lender sets their own guidelines and yes, they must be consistent in the application of the guidelines to approve/disapprove credit for that particular lender.  This specifically does NOT mean that all lenders have to have the same guidelines.  Right now we know that Chase has set a 5/24 rule, but we don't know the parameters of BOA's or WF or other banks similar rules.  Are there similar rules? Yes, because we have seen others turned down for agressive credit seeking with other lenders. We just don't yet know how many new accounts over which period of time generate the turn down. 

The really interesting thing here is this:  you can change your cc profile by simply waiting (called "gardening" here) until your accounts age two years; continue to pay on time and then apply again.  It isn't as if this is a permanent ban.  It is a simple turn down based on your current credit profile.  We all, as consumers, have our own individual credit profiles that change with time.  

If you are suggesting that the CFPB says the entire lender marketplace has to have identical rules, which is what I gather from  your arguement, then that in itself is a false statement. From your own posts, the CFPB is saying that the individual lenders' rules have to be applied the same to every consumer that applies; not that every lender has to have the same rules. Read your post again: this phrase " Refuse to extend credit, or use different standards in determining whether to extend credit" applies to each individual lender as they apply the criteria to each application. Not that Chase/BOA/WF et al have all the same criteria.  

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THIS^

I understand OP to be saying saying it's discriminatory that Chase uses different rules than 'all the other lenders' and that this is discrimination. And it's not (IMO). 

[redpat]

OP must have just graduated Law School.

[CreditCuriosity]

@pipeguy...  We definitely all have our own opinions and I also usually agree with you as well, but we might disagree on 08/09 meltdown w/regards to taxpayers among other things.  Purposely kept it vague as well as didn't feel like bringing one of the big 5 bad things to talk about on this forum and get a nice ban with it so avoided it  ..  We can agree to disagree and I did oversimplify it to a degree as well.  Anyways, moving on.

On another note if this does go into effect the 5x24 rule on co-branded cards I will probably kick myself for not applying for one more card before it takes effect for a nice bonus.  With that said I will survive with my current card line-up though and I believe I have all the best Chase cards already other than the Ink card..  The struggle is real not to apply for that card before the rule possibly takes effect on their business cards, although sticking with no new applications until December.  3 months in another week or two

[Anonymous]

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@StartingOver10 wrote:

I agree with hum above....we are being baited into a healthy debate

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Or I am going on a wild guess that OP is a new lawyer and using us to test the ease of his ability to argue. It is the only conclusion I arrive at as he keep quoting the law Thus the law this, that law that...

[Darinox]

Chase is treating everybody the same except people with equal or more than 5 accounts opened in a 24 months.

"(n)  Discriminate against an applicant means to treat an applicant less favorably than other applicants." How is Chase treating applicants with 5 accounts or more having the same qualifications as applicants that have less than <5? Favorably or unfavorably? 

[Anonymous]

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@redpat wrote:

OP must have just graduated Law School.

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You took the words right out of my mouth...  I completely agree.  If that is so, then he/she needs to take it up a notch. And if he/she can convince us and see his thinking then he/she will be one heck of a darn good lawyer..

[myjourney]

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@Anonymous wrote:

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@StartingOver10 wrote:

I agree with hum above....we are being baited into a healthy debate

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Or I am going on a wild guess that OP is a new lawyer and using us a test the easeof his ability to argue. It is the only conclusion I arrive at as he keep quoting the law Thus the law this, that law that...

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When I first saw this post that was my impression dissertation due on credit law 

[Anonymous]

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@Darinox wrote:

Chase is treating everybody the same except people with equal or more than 5 accounts opened in a 24 months.

"(n)  Discriminate against an applicant means to treat an applicant less favorably than other applicants." How is Chase treating applicants with 5 accounts or more having the same qualifications as applicants that have less than <5? Favorably or unfavorably? 

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 Your arguments carries no weight now so give it up.  It is flawed and you can carry on until the cows come home.  No one is convinced.