Most consumer credit regulation, especially at the federal level, is a disclosure-based system — disclose the terms to consumers and let them decide. There is a robust debate questioning whether the disclosure-based system works. I doubt that it does, but one demographic segment where it would seem particularly not to work are the elderly.

On that topic, the University of Illinois’s Elder Law Journal has just published a piece by Professor Donna Harkness of the University of Memphis: "When Over-the-Limit Is Over the Top: Addressing the Adverse Impact of Unconscionable Consumer Credit Practices on the Elderly." From the abstract:

Predatory lending practices in the credit card industry have created retirement instability for today’s elderly population. Many elderly individuals find themselves facing mounting debt, lawsuits, and foreclosure because of the eradication of state usury laws as a limit on interest rates, late fees, and other penalty charges. Existing laws, which focus on disclosure of credit terms to consumers, have done little to address or ameliorate the problems facing the elderly, who are more vulnerable to the negative effects of unconscionable consumer-credit practices. While many feel that the problem lies in the improvident extension of credit, evidence suggests that much of the profit gained by the credit card industry lies in extending credit to people more likely to default, such as the elderly. Professor Harkness advocates for the revision of the federal Truth in Lending Act to add substantive protections that would prohibit the charging of excessive late fees, require creditors to take affirmative steps to mitigate damages, and prohibit assessment of over-the-limit fees when debtors have not actually requested issuance of additional creditor. These revisions would help eliminate the financial incentives encouraging credit card companies to profit from the default and financial ruin of the elderly.

The article is at p. 1 of volume 16 of the Elder Law Journal and available here online. Those interested in elder law issues might want to check out the journal’s web site.