Have you noticed how the fine print is getting ever longer and finer in just about every purchase contract? Almost everyone has surely experienced clicking OK on lengthy terms and conditions windows when downloading software. Have you ever read all of that stuff? Do you know anybody who has? Not me. My reasoning on it is:
1. I’m going to end up agreeing to it anyway because, clearly, I won’t get the download without it.
2. Nothing awful is going to happen by agreeing to it, otherwise I’d be reading about it in the press.
3. There are government laws limiting the excesses that might be hidden in all those words.
Over the holidays we had occasion to purchase a major appliance at a big box store. In the process of the purchase we were told that if we applied for a credit card we would get a 5% discount on the purchase. Since we are talking over $2,000 here, that would be over $100, so I agreed. The whole thing went surprisingly fast because the store already knew all about me. I gave my name and my land-line phone number and up jumped my life history. Bada, bada, bing. I got a sales slip, complete with a bar code allowing us to shop, in that store only, on the new card immediately. Credit limit $5,000. And we got one more thing with it – the “Card Agreement”.
I took a picture of the Agreement – it was on pink flimsy paper and ran two columns over a length of about 4 feet. I estimate, based on 13 words per column line and 60 lines per foot, that it is about 6,240 words long. (At first I thought it was twice that long, but it turned out the other side was just duplication – in Spanish.)
Now that the dust has settled I see that the terms are actually pretty readable. Topics include how they compute interest charges based on APR’s, fees, payments, credit reporting, arbitration procedures (you can’t sue them), debt collection, small claims court, and so on. That they use the Annual Percentage Rate method is of course due to a government mandate rigidly defining that. Thank goodness. And this is the heart of the matter. If there were not laws defining consumer rights in the matter of credit, there would be no limits to manipulation of the vigorish. Further, I think it very significant that signing me up for this account should be worth more than $100 to the store. I actually feel a little guilty about it because we always pay our full balance on credit cards. Always have. It’s a legacy from our depression-era parents – if you can’t afford it you do without it.
Credit is dangerous. It is well established psychologically that people spend money much more readily with plastic than with cash. The simple act of having to pull bills out of a wallet and lay them on the counter is painful compared with swiping a card, and now even that is being replaced by the simple waving of a smart phone over a terminal. Bada, bada, bing. Novocaine was never so efficient. Pleasure now, pain later.
So, it was with satisfaction that I read last week about the President’s recess appointment of a man to head the new Consumer Financial Protection Bureau. I have always been a fan of financial education for the consumer. Capitalism is great, the engine of wealth unimagined before America led the way, but it is fundamentally a contest between buyers and sellers, and those most at risk in the process are the least educated and the least disciplined, and unfortunately there are far too many in that category in America today. And not only that, but fine print now routinely appears, massively, in every transaction. Whether you take a cruise, board a commercial plane, or ride a horse on a dude ranch, your rights, obligations and vulnerabilities are defined by unread fine print. It is not unreasonable then, in my opinion, that government should take a role as a referee for fairness in the game and give us some assurance that we don’t have to stop and read every word. Who’s got the time?