They tried an experiment in Fresno, California. Fresno was selected because it was believed that not many people were paying attention to what was happening there, so if the experiment flopped, the media wouldn’t pay much mind.
Bank of America dropped 60,000 unsolicited pieces of mail to citizens of Fresno. Inside was a plastic card. With a $500 pre-approved credit limit.
Within 10 months, more than 1 million cards were mailed to surrounding cities in California. But once the cards were mass mailed, fraud and theft became rampant. People would go to mailboxes in the suburbs and steal the cards when they knew they were going to be dropped. Also, since the cards were pre-approved, dead people, children and dogs were getting cards.
By the second year, cardholders had racked up nearly $60 million in purchases. The experiment initially lost money due to fraud and bad customers, but within 10 years was making Bank of America about $13 million a year.
The Truth in Lending Act in 1968 ended the unsolicited mailings. BankAmericard later became Visa.
Today, over 70% of Americans have at least one credit card, and US credit card debt is around $900 billion.
