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)