Joseph Lopez is 75-years-old and lives in a South Sacramento trailer park. Last year his wife needed a bridge for her teeth. It had a $3,000 price tag and Lopez didn’t have dental insurance. So, he says, his dentist signed him up for a credit card.
“The reason I took their way of financing the work was because they told me I would not have any interest for two years.”
But he says he never got an application for the card and got the bill before the treatment was done. Plus, he says, they overcharged him.
“They manipulated the agreement, they change it from $3,000 to $5,000 without my consent and I was very upset about that.”
Lopez disputed the charges with the credit card company and his dentist but he says it didn’t help. He was signed up for a card called CareCredit that’s designed to pay for medical costs. He says they threatened to sue him if he didn’t pay.
“Psychologically it is very disarming because you figure they are going to take me to court, my house, my car, my bank account, you know. So you fear those kinds of things and you go their way.”
And Lopez says the dentist didn’t do very good work. So he got help from a lawyer and eventually CareCredit backed off. This kind of story is becoming an all too familiar one according to Elizabeth Landsberg. She’s an attorney with the Western Center on Law and Poverty.
“It’s a new trend that we’re seeing. We didn’t have any of these cases in 2006. We saw some in 2007 and we saw a lot more in 2008.”
Landsberg says the consumer fraud claims are mainly from the poor, the elderly and non-English speakers. And she accuses CareCredit of predatory lending practices. She says people can get broadsided by an up to 30 percent retroactive interest rate for a late payment. Landsberg says it’s a lot like the subprime mortgage crisis.
“Both with the foreclosures and with these dental credit cards, people are being convinced to take on more credit than they can afford. We have people who are living on a fixed income of a $1,000 a month who are being signed up for $6,000 in credit, there’s no way they can make those payments.”
CareCredit declined to do an interview for this story after repeated requests. But spokeswoman Cristy Williams did say the company is responsible in how it approves credit lines and the majority of their customers are happy with the services. Right now, she says CareCredit has an all time high of 100,000 providers around the country offering the card. About half are in dental care, but plastic surgeons and veterinarians offer the card too.
At Dental Care by Design in Sacramento Dr. Douglas Lott says CareCredit gives his patients options.
“Sometimes it is important for their dental health to get something fixed when they don’t have the money to do it. And the consequences of not fixing that problem, the costs just spiral.”
Lott says the cards help his business too. He gets the money for procedures up front and in full. And if a patient defaults on payment, CareCredit deals with collection. But Lott looked concerned when he heard about the nearly three dozen complaints about the cards that have come into California legal aid offices.
“Well I don’t like credit cards in general but I don’t know if there’s a better option.”
And that’s what professional trade groups say as well, like the California Dental Association, or CDA. It endorses the card. But there’s a catch. It’s another thing Lott says he didn’t know about. CareCredit pays for the endorsement.
Cathy Mudge is CDA’s Chief Administrative officer. She says the association does not publicly disclose the payment.
“I’m not quite sure that patients would necessarily need to know that. If we do endorse a product we believe that we’ve done the research and analysis to assure that it’s an excellent product for both the dentist and the patient.”
Mudge says the more dentists who sign up for the card, the more money the association gets. But she says the CDA’s contract with CareCredit prohibits her from discussing how much money changes hands. The American Dental Association also gets paid for its endorsement.
“It sort of reeks of conflict, it makes it seem like it was not an independent decision.”
That’s legal aid advocate Elizabeth Landsberg again.She says the endorsements and what she calls illegal practices by credit companies are symptoms of a larger problem – a broken health care system.
“It is a disturbing trend to think that someone could risk financial ruin, could risk bankruptcy, by signing up for these credit card products just to stay healthy.”
Last year, Governor Schwarzenegger vetoed a bill in California to regulate dental credit cards. But advocates haven’t given up. They say protecting consumers is more urgent than ever and they’ve sponsored a similar bill again this session.