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Date Submitted: 09/16/2012 07:29 AM

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With the current financial crisis, the country is seeing today, one has to ask ‘What are the legal and ethical issues with providing credit?” Companies today are in the market to make money off others credit. Money is made in the forms of interest rates, late fees, annual fees, and origination fees to name a few. These companies are in the mortgage, credit card, and short-term lending industries. In particular, the prevalence of credit cards and the accumulation of consumer debt in the USA and other advanced countries have been important drivers of economic growth in recent years (Cohen 2007).

The driving economic force in most advanced nations is no longer personal savings, but rather purchases sustained by consumer debt – especially by credit cards. The overall importance of this mode of finance has soared over the past three decades and Americans now carry an average of 6.5 credit cards (2.7 bank-issued cards and 3.8 store-issued cards). In the

USA, annual credit card expenditures in 1971 were approximately $600 (2002 US dollars) per household; by 2002, this amount had increased to over $10 000 (2002 US dollars) (Evans and Schmalensee, 2005).

The accumulation of untenable debt loads now prompts more than 1.5 million American households to file for bankruptcy each year. observers contend that Americans, especially those situated in the upper tiers of the income distribution, have been engaged for the past two decades in a profligate consumption binge, and the upsurge in household fiscal distress is the outcome of this uncontrolled extravagance (Durning, 1992).

Lenders have further enhanced the profitability of credit cards by tapping low-income households and other borrowers who were previously outside the credit card economy (Ford and Rowlingson, 1996). Employment is no longer even a precondition of a successful credit card application as evinced by the fact that jobless college students are now a very attractive market (Roberts and Jones,...