Courts Are Finally Taking Action against Unscrupulous Sub-Prime Credit Card Companies

Not Your Average Lending Practice

When you think of the people credit card companies target, individuals with decent income and good credit come to mind. However, there are credit card companies that actually target people with low incomes, poor credit and the inability to pay the ridiculously high interest rates these credit card companies charge. Then, when the people who have the credit card can’t pay the bills, these sub-prime credit card companies implement near-abusive collection practices to bleed these people dry.

Where the Sub-Prime Lenders Cross the Line

You may say that the people these sub-prime lenders target make their own beds by accepting a credit card they can’t afford. After all, there’s nothing wrong with charging a high interest rate or giving people a second chance to rebuild their credit, right? In theory, no, there is nothing wrong with giving people a second chance at good credit or charging a high interest rate, however, if you offer people one thing and give them another, that’s where the trouble starts.

In the case of Columbus Bank and Trust Co. and CompuCredit Corp, the sub-prime credit card company offered New York residents with poor credit and/or low income an Aspire Visa card, touting the card would give them a high credit limit with no annual fee. When people actually got the credit card, their credit limits were usually no more than three-hundred dollars and they were instantly charged fees of up to $179 just to get the card -- fees they were never told about.

So now you have a bunch of people who owe $179 at a ridiculous interest rate and little or no ability to pay the bill. They didn’t ask to be put in this situation and were actually misled into taking the credit card. That is where the problem lies.

Calling Them Out

Fortunately, action was taken against this practice. New York’s Attorney General accused the sub-prime credit card provider of not disclosing fees and fines to applicants and card holders, enrolling card members in costly programs without their consent and misleading card holders as to how much credit they would receive. As a result, the company is now required to reimburse the New Yorkers who were abused by the card the cost of their activation fees and the cost of the programs they were enrolled in without consent. The company also has to pay over half-a-million dollars in fines to the State of New York.

While there are still sub-prime credit card predators in the credit card market, hopefully more and more states will begin to take action against these illegal practices. In the meantime, if you or someone you know receives an offer from a sub-prime credit card company, think twice about taking them at their word.