xml:space="preserve">
xml:space="preserve">
Advertisement

Regulators pursue credit card marketer

Two regulators are accusing credit card marketer CompuCredit Corp. of deceptive practices in the selling of credit cards to subprime consumers.

Yesterday, the Federal Deposit Insurance Corp. said it wants the Atlanta-based credit card marketer along with two banks to pay restitution of more than $200 million to consumers.

Advertisement

The FDIC also seeks civil penalties of $6.2 million from CompuCredit and a total of $431,000 from the company's two banking partners – First Bank of Delaware in Wilimington and First Bank & Trust in Brookings, S.D.

On top of that, the Federal Trade Commission also yesterday announced it is suing CompuCredit and its debt-collection subsidiary, Jefferson Capital Systems, for deceptive practices.

Advertisement

The FDIC and FTC conducted a joint investigation on CompuCredit.

Regulators object to the marketing of three types of cards, offered under such names as Aspire, FreedomCard, Tribute, Majestic and Advantage. Basically, regulators say CompuCredit failed to adequately disclose terms and consumers ended up with

For example, a cared marketed to consumers with low credit scores promised a $300 line of credit. But regulators say once fees were factored in, the line of credit was as low as $115.

CompuCredit denied the allegations in a statement, saying: "The claims asserted by the FTC and FDIC regarding CompuCredit's past credit card marketing practices are untrue and without merit. The credit card programs at issue complied with applicable laws and regulations and have exemplified best practices in credit card marketing."

First Bank of Delaware "believes that the FDIC's claims are unfounded and unfair," Harry Madonna, the lender's chairman and chief executive officer told Bloomberg News. "The bank will vigorously defend its programs through the administrative hearings process afforded to banks by federal law."

David Waligoske, executive vice president at First Bank & Trust, declined to comment on the charges, Bloomberg reported.

A third CompuCredit partner – Columbus Bank and Trust in Georgia – settled with the FDIC. It paid a $2.4 million penalty and agreed to set aside $7.5 million for restitution.

Recommended on Baltimore Sun

Advertisement
Advertisement
Advertisement