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July
5, 2006
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.
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