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I am a consumer protection attorney who does work advocating for individuals with credit card and debit card disputes. I’m pretty opposed to this change, even

I am a consumer protection attorney who does work advocating for individuals with credit card and debit card disputes. I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes. This reeks of all of the times that an industry foists some type of “protection“ on consumers to address some alleged abuse of the system. For example, you used to be able to discharge student loans in bankruptcy. Then the industry made up a BS narrative that people were taking out tons of loans, getting their degrees, and then filing for bankruptcy em masse. It was a lie. The number of people who are filing for bankruptcy and getting student loans discharged was infinitesimally small. But that didn’t stop them from lobbying Congress for modifications that prohibit the discharge of student loans in bankruptcy. And, well, you know how the rest goes. My point is, the alleged abuse is almost certainly a very small, or even, non-issue. But these changes will have dramatic, negative repercussions on a large swath of customers.

Waterluvian 4y ago
Re: student loans. Wow really? I thought that abuse would be a certainty given grads have no assets and you can’t repossess a degree.
- thathndude 4y ago
  Not at all. The whole thing was a canard. And it makes total sense. Filing for bankruptcy is no small thing. The narrative was something like “people will just file bankruptcy“ but you don’t “just“ file bankruptcy. You destroy your credit for 5+ years when you file bankruptcy. So good luck to all these grad students getting a mortgage. Heck, there are a lot of jobs out there where filing for bankruptcy will weaken your chance of getting the job or outright exclude you. People don’t halfheartedly file bankruptcy. And beyond those systemic barriers, believe it or not, most people aren’t looking to just screw over whatever entity On their loans. You think people want to screw over student loan companies because you exist in the current system where predatory behavior occurs, where you can’t discharge your loans in bankruptcy. As such, you are used to seeing stories about peoples lives being ruined by their student loans. That’s why people hate student loan companies. In a world where student loan companies weren’t so predatory and encouraged to be predatory by unfair bankruptcy exemptions, the narrative towards that might be completely different, and more favorable. *Just to get a head of a comment that might be forthcoming, I am well aware that student loans actually can be discharged in bankruptcy. But they are given favorable treatment (for the creditor), and you have to make an above and beyond showing to have them discharged relative to other forms of debt.
  - dfadsadsf 4y ago
    In current environment few people buy houses <5 years after graduation and I have never heard about job checking credit score/bankruptcy data. May be some jobs related to finances? Definitely not tech companies. And in retail/low wage jobs most people have shitty credit so there is no point in checking.
    - Retric 4y ago
      “31% of employers ran credit checks on some applicants, and 16% checked all applicants' credit.” Which understates things as larger companies are more likely to run routine credit checks.
    - deleted 4y ago
      [deleted]
    - bb88 4y ago
      In many jobs, (banking, defense...) a good credit score is a mark of trustworthiness. And when you think about it, if you're going to hire someone involved in your money stream, wouldn't you want to know if they've ever, say, been indebted to a casino? Had a home repossessed? Hell, even a walmart cashier might handle 1k or 2k of currency a day.
    - jlokier 4y ago
      People <5 years after graduation not buying houses are usually renting, and renting often requires a credit check, so bankruptcy would still adversely affect their housing.
  - redeeman 4y ago
    a sitting member of US congress is refusing to pay off her loans, and is trying extremely hard to get loan forgiveness done by the president, and is seemingly(my speculation) not paying off, even the minimum amount, as she (again, my speculation) seems to bank on the loan forgiveness happening. She drives(or was it sold?) a Tesla, but wouldnt make minimum payments.
    - 4y ago
- delecti 4y ago
  When college costs are reasonable, kneecapping your credit for 7 years right as you're entering the workforce is a big headache. But preventing people from discharging student loans in bankruptcy means that there was no pressure to keep college costs low, because there's no reason to be cautious with giving enough loans to cover exorbitant costs.
  - thathndude 4y ago
    Well, that’s a really great point. I’m not trying to hijack this post with analysis about student loans. But you’re totally right. We are increasingly looking to relief from student loans, precisely because they have gotten so out of control. And part of the reason they have gotten so out of control is because they had bankruptcy protection, so they were given to anyone and everyone without fear of bankruptcy. And when you flood a system with money, as we’ve learned in the past 24 months, prices go up. So now people need to take out more loans, which are readily available because they can’t be discharged in bankruptcy, and the glorious cycle continues.
- thathndude 4y ago
  Another random thought. Just wait till we are living in the crypto utopia, and your degree is an NFT. And you can’t use it until you pay it off.
ericmcer 4y ago
I’m totally opposed to predatory student loans, but your point seems kinda light on logic. If the number of student loans being discharged was “infinitesimally small” and we can assume prohibiting bankruptcy drove the number of delinquent loans down even lower, why are student loan repayments considered a huge issue?
- schimmy_changa 4y ago
  I'm guessing that possibility kept a lid on predatory lending, especially by for-profit colleges. For instance, if you know that your students have an option to discharge, then you'll make sure not to charge them enough that they see that discharge and stain of bankruptcy as better than just paying off the loan. It was a (dramatic, drastic, and undesired) weapon that consumers had in their back pocket. Get rid of the safety valve, and then see what happens as the colleges realize there's no balance of power... you get the current situation.
  - thathndude 4y ago
    This is also a salient point. When these lenders know that they can lend out money, it will be back completely by the federal government, and it can’t be discharged in bankruptcy, they have very little incentive not to lend. That completely destroys the standard economics and considerations behind any type of credit
    - dragonwriter 4y ago
      > When these lenders know that they can lend out money, it will be back completely by the federal government, Even with nondischargeability for student loans in general, only loans participating in specific federal programs (which have limits, both as to institutions and amounts) were eligible for federal guarantees, and the part of those programs that lenders other than the federal government itself participated in was ended in 2010.
  - datavirtue 4y ago
    You can't just file for bankruptcy if you are making money. I guess the mass numbers of people filing where not making any money. That is the real issue. Why weren't they making enough to at least get forced into a repayment plan?
randombits0 4y ago
Large swath of what again? Customers? Well, the answer is clear to me. Don’t use Visa.
choppaface 4y ago
Note that the study being cited is by Sift, a YC company that has been heavily monetizing your own transaction history: https://www.nytimes.com/2020/01/15/technology/data-privacy-law-access.html https://www.nytimes.com/2020/01/15/technology/data-privacy-l... Max Levchin sort of tore apart Sift trying to get it to spit out money. I’m sure being able to play chargebacks from both sides was always his dream.
erichocean 4y ago
> For example, you used to be able to discharge student loans in bankruptcy. IMO, a non-dischargeable loan should have a 0% interest rate by law. All banks would get is an origination fee, capped by statute to some low amount (say, 1% of the principal). I'd be in favor of this being applied retroactively, so that all interest paid on non-dischargeable student loans in the past was applied to the principal and any overages refunded to the borrower (perhaps over a period of time or against taxes owed or similar). I'd prefer both of these to be done instead of a one-time "student loan forgiveness" program.
- datavirtue 4y ago
  Yeah, an interest refund would be a creative way of dealing with this.
tzs 4y ago
> I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes. It sure doesn't look that way from my end. I maintain the payment processing stuff for a small seller of digital goods and services. The services need to regular contact our servers in order to perform their service, and in that contact they identify which customer is using them. If a customer cancels and asks for a refund we always give the refund. If they are more than around 20% into the term of their service and our logs show that they have been using it we might prorate the refund, but usually we just give a full refund. No hoops. They can cancel and request a refund by calling support or do it entirely online without any need to interact with a human. The only people who might have a good reason for a chargeback are people whose credit cards were stolen and the thieves purchased something from us to check if the card was valid. We almost never see such chargebacks. Almost all the chargebacks are people who tell their bank that they don't recognize the charge but they have actually been using the service actively for years. Some are on monthly subscriptions and so have had dozens of charges from us before and now suddenly have no idea who we are. Heck, a fair number of these people even have had their subscriptions stop because their on-file card was no longer valid, came to their account page at our side and updated their payment info to reactivate their subscription, and then the next time it is time for renewal they are calling their bank saying they never heard of us. I don't think we have ever been able to convince the bank or card companies to deny any of these chargebacks. None of the use or transaction history matters. They just tell us to FAX them a copy of the customer's signed receipt from the original sale.

Waterluvian 4y ago

Re: student loans. Wow really? I thought that abuse would be a certainty given grads have no assets and you can’t repossess a degree.

thathndude 4y ago
Not at all. The whole thing was a canard. And it makes total sense. Filing for bankruptcy is no small thing. The narrative was something like “people will just file bankruptcy“ but you don’t “just“ file bankruptcy. You destroy your credit for 5+ years when you file bankruptcy. So good luck to all these grad students getting a mortgage. Heck, there are a lot of jobs out there where filing for bankruptcy will weaken your chance of getting the job or outright exclude you. People don’t halfheartedly file bankruptcy. And beyond those systemic barriers, believe it or not, most people aren’t looking to just screw over whatever entity On their loans. You think people want to screw over student loan companies because you exist in the current system where predatory behavior occurs, where you can’t discharge your loans in bankruptcy. As such, you are used to seeing stories about peoples lives being ruined by their student loans. That’s why people hate student loan companies. In a world where student loan companies weren’t so predatory and encouraged to be predatory by unfair bankruptcy exemptions, the narrative towards that might be completely different, and more favorable. *Just to get a head of a comment that might be forthcoming, I am well aware that student loans actually can be discharged in bankruptcy. But they are given favorable treatment (for the creditor), and you have to make an above and beyond showing to have them discharged relative to other forms of debt.
- dfadsadsf 4y ago
  In current environment few people buy houses <5 years after graduation and I have never heard about job checking credit score/bankruptcy data. May be some jobs related to finances? Definitely not tech companies. And in retail/low wage jobs most people have shitty credit so there is no point in checking.
  - Retric 4y ago
    “31% of employers ran credit checks on some applicants, and 16% checked all applicants' credit.” Which understates things as larger companies are more likely to run routine credit checks.
  - deleted 4y ago
    [deleted]
  - bb88 4y ago
    In many jobs, (banking, defense...) a good credit score is a mark of trustworthiness. And when you think about it, if you're going to hire someone involved in your money stream, wouldn't you want to know if they've ever, say, been indebted to a casino? Had a home repossessed? Hell, even a walmart cashier might handle 1k or 2k of currency a day.
  - jlokier 4y ago
    People <5 years after graduation not buying houses are usually renting, and renting often requires a credit check, so bankruptcy would still adversely affect their housing.
- redeeman 4y ago
  a sitting member of US congress is refusing to pay off her loans, and is trying extremely hard to get loan forgiveness done by the president, and is seemingly(my speculation) not paying off, even the minimum amount, as she (again, my speculation) seems to bank on the loan forgiveness happening. She drives(or was it sold?) a Tesla, but wouldnt make minimum payments.
  - 4y ago
delecti 4y ago
When college costs are reasonable, kneecapping your credit for 7 years right as you're entering the workforce is a big headache. But preventing people from discharging student loans in bankruptcy means that there was no pressure to keep college costs low, because there's no reason to be cautious with giving enough loans to cover exorbitant costs.
- thathndude 4y ago
  Well, that’s a really great point. I’m not trying to hijack this post with analysis about student loans. But you’re totally right. We are increasingly looking to relief from student loans, precisely because they have gotten so out of control. And part of the reason they have gotten so out of control is because they had bankruptcy protection, so they were given to anyone and everyone without fear of bankruptcy. And when you flood a system with money, as we’ve learned in the past 24 months, prices go up. So now people need to take out more loans, which are readily available because they can’t be discharged in bankruptcy, and the glorious cycle continues.
thathndude 4y ago
Another random thought. Just wait till we are living in the crypto utopia, and your degree is an NFT. And you can’t use it until you pay it off.

ericmcer 4y ago

I’m totally opposed to predatory student loans, but your point seems kinda light on logic. If the number of student loans being discharged was “infinitesimally small” and we can assume prohibiting bankruptcy drove the number of delinquent loans down even lower, why are student loan repayments considered a huge issue?

schimmy_changa 4y ago
I'm guessing that possibility kept a lid on predatory lending, especially by for-profit colleges. For instance, if you know that your students have an option to discharge, then you'll make sure not to charge them enough that they see that discharge and stain of bankruptcy as better than just paying off the loan. It was a (dramatic, drastic, and undesired) weapon that consumers had in their back pocket. Get rid of the safety valve, and then see what happens as the colleges realize there's no balance of power... you get the current situation.
- thathndude 4y ago
  This is also a salient point. When these lenders know that they can lend out money, it will be back completely by the federal government, and it can’t be discharged in bankruptcy, they have very little incentive not to lend. That completely destroys the standard economics and considerations behind any type of credit
  - dragonwriter 4y ago
    > When these lenders know that they can lend out money, it will be back completely by the federal government, Even with nondischargeability for student loans in general, only loans participating in specific federal programs (which have limits, both as to institutions and amounts) were eligible for federal guarantees, and the part of those programs that lenders other than the federal government itself participated in was ended in 2010.
- datavirtue 4y ago
  You can't just file for bankruptcy if you are making money. I guess the mass numbers of people filing where not making any money. That is the real issue. Why weren't they making enough to at least get forced into a repayment plan?

randombits0 4y ago

Large swath of what again? Customers? Well, the answer is clear to me. Don’t use Visa.

choppaface 4y ago

Note that the study being cited is by Sift, a YC company that has been heavily monetizing your own transaction history: https://www.nytimes.com/2020/01/15/technology/data-privacy-law-access.html https://www.nytimes.com/2020/01/15/technology/data-privacy-l... Max Levchin sort of tore apart Sift trying to get it to spit out money. I’m sure being able to play chargebacks from both sides was always his dream.

erichocean 4y ago

> For example, you used to be able to discharge student loans in bankruptcy. IMO, a non-dischargeable loan should have a 0% interest rate by law. All banks would get is an origination fee, capped by statute to some low amount (say, 1% of the principal). I'd be in favor of this being applied retroactively, so that all interest paid on non-dischargeable student loans in the past was applied to the principal and any overages refunded to the borrower (perhaps over a period of time or against taxes owed or similar). I'd prefer both of these to be done instead of a one-time "student loan forgiveness" program.

datavirtue 4y ago
Yeah, an interest refund would be a creative way of dealing with this.

tzs 4y ago

> I’m pretty opposed to this change, even though it’s veiled in terms of fairness. The fact is, the banks and Visa are far too quick to deny disputes. It sure doesn't look that way from my end. I maintain the payment processing stuff for a small seller of digital goods and services. The services need to regular contact our servers in order to perform their service, and in that contact they identify which customer is using them. If a customer cancels and asks for a refund we always give the refund. If they are more than around 20% into the term of their service and our logs show that they have been using it we might prorate the refund, but usually we just give a full refund. No hoops. They can cancel and request a refund by calling support or do it entirely online without any need to interact with a human. The only people who might have a good reason for a chargeback are people whose credit cards were stolen and the thieves purchased something from us to check if the card was valid. We almost never see such chargebacks. Almost all the chargebacks are people who tell their bank that they don't recognize the charge but they have actually been using the service actively for years. Some are on monthly subscriptions and so have had dozens of charges from us before and now suddenly have no idea who we are. Heck, a fair number of these people even have had their subscriptions stop because their on-file card was no longer valid, came to their account page at our side and updated their payment info to reactivate their subscription, and then the next time it is time for renewal they are calling their bank saying they never heard of us. I don't think we have ever been able to convince the bank or card companies to deny any of these chargebacks. None of the use or transaction history matters. They just tell us to FAX them a copy of the customer's signed receipt from the original sale.