Posted Aug 17, 2007 11:42 pm CDT
A South Dakota bank has agreed to pay $4.5 million to settle a claim by the New York attorney general that it charged credit-challenged customers excessive fees.
The money will now be available to reimburse customers who paid huge fees for subprime credit cards with tiny credit limits because of deceptive marketing tactics by First Premier Bank, according to the New York Times. One man, for instance, was charged an approximately $178 upfront fee for a credit card with a $250 limit. He reportedly used it twice, charging $21 and $31. With late fees and other charges, he eventually wound up owing about $500 and got a black mark on his credit to boot.
According to another version of the same New York Times article, the $178 upfront fee was standard, as was the bank’s practice of promising a card with a $2,000 limit and a 9.9 percent fixed interest rate on unpaid balances.
“In reality, most consumers received a $250-$300 credit line at a 9.9 percent interest rate that could more than double without notice,” said New York Attorney General Andrew Cuomo in a press release. “Even before consumers had a chance to activate or use their credit card, First Premier billed $178 upfront fees for processing the credit card application.”
The bank did not admit liability, and a spokesman said it had changed most of the practices at issue in the case.
To apply for a refund, individuals must file a complaint within 90 days. To do so, they should call the attorney general’s help line at 1-800-771-7755, according to a press release from Cuomo’s office. The press release also provides a link to the settlement agreement in the case.