is the term for a practice in the financial services
industry in the United States for a particular lender to change the terms of a loan from the normal terms to the default
terms (i.e. the terms and rates given to those who have missed payments on a loan) when that lender is informed that their customer has defaulted with another lender, even though the customer has not defaulted with the first lender.
This is a phenomenon that dates from the mid-1990s. Credit card companies included universal default language in their cardholder agreements at that time, due to increasing deregulation
of the industry. Today, approximately half of the banks that issue credit cards
have universal default language. However, since the inception
of these provisions, most credit card companies have not enforced them regularly or systematically.
Every year since at least 2003, Congress has considered several bills to curb abusive credit card practices, including universal default provisions. In the meantime, the Office of the Comptroller
of the Currency issued a stern advisory letter
to the credit card industry regarding several of the most egregious practices. Most credit card companies have not responded to the letter.
In 2007, Citibank became the first bank to voluntarily eliminate its universal default provision.
In 2009, most forms of the practice were outlawed
in the United States.