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Misplaced Plastic

A recent letter from Leona Jackson of Stone Mountain, Ga., may have revealed a loophole Congress overlooked in the Credit Cardholders’ Bill of Rights, its springtime slap down of the banking industry: charging customers fees and interest on cards they never received.

Jackson recently heard from a collection agency that claimed she was long past due on a $207 debt owed on a Barclays Bank credit card. The puzzling part was that she’d never had a Barclays Bank card. Identity theft came to mind, except that all the information that the collection agency had was correct, including her address.

She might have been convinced that her memory was failing until she recalled filling out an application for a US Airways travel MasterCard about a year earlier while waiting for a plane. She’d never heard back from US Air: had received no letter of approval or rejection, and certainly no card. She told this to the collection agency and asked for the details of the debt, but the agency said it didn’t have that information. It just wanted the money. If it couldn’t collect, her credit rating would suffer. Without so much as an account number, Barclays wasn’t able to help her, either. That’s when she contacted me.

Two possibilities came to mind. Either the card had been pilfered from the mail, or something was wrong at the bank. Either way, my next call had to be to someone at Barclays to see if they could cast any light on the situation.

I found Kevin Sullivan, managing director of communications for Barclaycard US. And that’s how I discovered that the British bank is a credit-card provider for US Airways. After digging into the matter, Sullivan got back to me with an apology and a scary story.

Jackson’s application for the US Airways–Barclays Bank MasterCard was approved shortly after she’d submitted it; a card was sent out but was never activated. It wasn’t until after Sullivan looked into things that Barclays discovered it got Jackson’s address wrong somewhere along the line—meaning her shiny new credit card had landed in somebody else’s mailbox. Whoever got the card apparently didn’t use it: There were no fraudulent charges, just $207 in annual fees and late fees.
Sullivan promised to remove the charges, reissue the card, contact the credit bureaus to remove any errant information, and provide a bonus of 10,000 travel miles for Jackson’s time and trouble. Sullivan also admitted that the situation had uncovered a problem with the bank’s billing practices. Until that time, Barclays would bill annual fees on cards, whether or not the cardholders had ever activated their cards. Sullivan said that, as a result of the Jackson snafu, Barclays will only charge annual fees after a card is activated.

While Leona Jackson’s specific situation is rare, anyone applying for a credit card should remember some important points:

1.  Track the Application
— A credit-card application is a high-dollar-value, binding contract. Treat it as you would any other major debt, such as a home mortgage or a car loan. If you don’t hear anything about it for a couple of weeks, call for a status report.

2.  Be Selective
— Every time you apply for new credit, your credit report takes a ding. This is because credit-reporting agencies won’t know for perhaps several months whether or not you have received credit; they assume you have and lower your credit score accordingly. (Your credit score goes down, because the more credit you have, the less you can take on.)

3.  Close Accounts in Writing — I get lots of complaints about credit-card, cell-phone, and utility accounts that were supposed to have been closed but weren’t and have built up big bills in the meantime. While most of these situations can be straightened out in time, it helps if you have a registered letter showing the date on which you asked that the account be closed.

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