Credit Cardholders in the United States, New Zealand and Germany: a Need for More Protection?

Abstract

The currency of the modern world is increasingly changing from paper to plastic. Other payment systems like cash or checks have already been replaced in some business areas by credit cards. If the development is continuing the currency of the future will be indeed plastic. For the first time in history a currency will then be controlled not by the state but by private companies. However the state is called upon here to regulate this payment system. Countries like the United States of America, New Zealand and Germany are meanwhile aware of the necessity to regulate this basic element of daily life. The paper focuses on five main issues of credit card regulation and compares the different approaches of these countries in order to reveal where additional statutory protection for cardholders is warranted. Part I anticipates in a few sentences the main results of this analysis. Part II shortly describes the process of a credit card payment. Part III examines the cardholder protection in the United States, New Zealand and Germany in case of an unauthorised payment. The comparison and evaluation of the different approaches shows that New Zealand can improve its protection level. Part IV examines the regulation of interest rates in the three countries and reveals reform potential in the United States and New Zealand. Part V analyses the regulation of credit card fees and reveals the need for a more comprehensive approach in the United States. Part VI gives an overview of credit card debts in the consumer bankruptcy and reveals urgent reform need in Germany. Part VII examines the protection of credit card holders in case of dispute with the merchant and sees need for the introduction of vicarious liability rules for credit card purchases in Germany and New Zealand Part VIII briefly summarises all results.