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Abstract

Three years ago, the U.S. Congress passed the Credit CARD Act of 2009. This ambitious piece of consumer protection legislation sought to relieve consumer debt burdens by targeting credit card industry abuses and providing new disclosures. Congress acknowledged that the legislation would not help individuals who borrow irresponsibly on their credit cards, implicitly assuming that it could not encourage more provident decisionmaking. This assumption was a mistake. Human decisionmakers are susceptible
to behavioral biases—predictable deviations from perfect rationality. This Comment discusses how these biases encourage consumers to take on excessive credit card debt and calls for Congress to consider how legislation can counteract behavioral biases in the credit card context. It concludes by discussing several possible reforms in three main categories—making costs of credit card use more salient, equipping credit cards with
commitment devices, and prohibiting practices that encourage consumer overconfidence.

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