American Express CEO seeks clearer card terms

WASHINGTON, Oct 2 (Reuters) - American Express Co (AXP.N: Quote, Profile, Research, Stock Buzz) Chief Executive Kenneth Chenault said on Tuesday that fundamental changes were needed to credit card practices so that customers can understand rates and fees more easily.

"What I believe in firmly is that the disclosure and practices of the credit card industry, some of them need to be changed in a fundamental way," Chenault told a group of business executives and lawyers.

He criticised the use by some competitors of "universal default", which triggers higher, and unexpected, interest rates if the consumer is late paying another credit card bill, a home mortgage, a utility bill or even a book club membership.

Chenault said American Express did not do this and that a number of other credit card companies had stopped because of recent congressional interest in credit card practices.

"What I'm not going to do is defend practices that I don't think work," Chenault said, referring to universal default. "We never put that in and a number of companies as a result of Congress getting involved have stopped doing it."

Congress is scrutinising what are seen as abusive and deceptive practices by some card companies, which have also been criticized for using heavy-handed tactics to push up Americans' debt levels.

Among other things, failures by card issuers to properly notify customers of rate changes and fees have been criticised by U.S. lawmakers.

The Federal Reserve has proposed clearer, expanded disclosure to help consumers understand changes to terms.

"I believe very strongly that disclosure and sunlight is a way to deal with some of these practices," Chenault said.