Columbus Bank and Trust Company, CompuCredit Corporation Agree to Pay New Yorkers $11 Million in Restitution for Deceptive Business Practices

Columbus

Bank and Trust Company, CompuCredit Corporation Agree to Pay

New Yorkers $11 Million in Restitution for Deceptive Business

Practices

New York Attorney General Eliot Spitzer announced Monday an

agreement between the state and sub-prime credit card lenders

Columbus Bank and Trust Company and Compucredit Corporation

in which the lenders will pay $11 million in restitution to

New York customers based on past deceptive practices. Consumers

complained about practices associated with the Aspire Visa,

a product issued by Columbus Bank and Trust and marketed by

CompuCredit.

In

specific, the complaints charged that the lenders failed to

adequately inform their customers--most of who are people with

poor credit histories--of the amounts in fees that would be

required to carry the card, exaggerated credit line offerings,

enrolled customers in third-party membership programs against

their wishes and engaged in improper debt collection practices.

Columbus

Bank and CompuCredit will also make restitution of $11 million

to cardholders, including credits and refunds for account activation

fees and charges for third-party membership clubs. In addition,

the companies will pay $525,000 to the state in civil penalties

and costs. The two companies also agreed to improve disclosure

and reform debt collection practices. Individuals eligible for

credits or refunds will be contacted by a letter directly from

Aspire Visa/olumbus Bank.

The

settlement follows an order Spitzer's office won in January

against Cross Country Bank, another large subprime credit card

issuer, in which Cross Country was ordered to pay approximately

$10 million in penalties and restitution.

Published 07/05/06 (Modified 05/07/12)