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You may have seen the reports today about Kevin Johnson, whose credit card company lowered his credit line by $6,200 based in part on where he shops. The letter from his credit card company said that they were lowering his credit limit because:

“Other customers who've used their card at establishments where you recently shopped have a poor repayment history with American Express.”

"I was shocked when I read it," Johnson admitted, "because I didn't know that companies could assess your credit worthiness based on others around you."

Charging people more based on where they shop is just the kind of sketchy behavior I think financial regulators should be investigating. Shouldn't the consumer know if his efforts at frugality by shopping at Wal-Mart or Kmart are going to cost him more in the end?

A key piece of the financial reform proposals being debated in Congress this week is a Consumer Financial Protection Agency, charged with making sure financial products are fair and that all charges and penalties are disclosed to consumers in plain English. Rep. Barney Frank proposed amendments to that bill last week that could let credit card companies' behavior slide.

A provision in the president’s version of the bill would have required the CFPA to oversee companies that collect consumers’ financial information. Frank's draft deletes language that placed any company under the jurisdiction of the CFPA that is in the business of:

Collecting, analyzing, maintaining, and providing consumer report information or other account information by covered persons, including information relating to the credit history of consumers and providing the information to a credit grantor who is considering a consumer application for credit or who has extended credit to the borrower.

So, if a data broker decides that people who shop at Babies R' Us are riskier than those that never have, it can tell your credit card company you should be charged more and the Agency wouldn’t even be able to ask them to open the books and prove you’re a bigger risk.

It’s good that Mr. Frank decided to make very clear that, as opponents have tried to claim, a consumer financial regulator won’t be butting its nose into local businesses that have nothing to do with credit. But opponents’ fear campaign shouldn’t scare anyone into exempting from oversight companies that dig into your personal business to play a key role in determining how much you pay for credit.