Credit cards, while often a risky financial product, can at times prove to be a proverbial lifesaver when you get into a pinch. For that reason, most consumers who apply for a card envision using it as a valid form of payment for any number of reasons. While a Texas-based company marketed their credit card as general-use, consumers quickly found out that wasn’t actually the case. And so, the Consumer Financial Protection Bureau has filed suit against the company for its allegedly deceptive ways.
The CFPB announced today that it has filed suit against Union Workers Credit Services accusing the company of deceiving customers into paying fees to sign up for a sham credit card. The Bureau seeks to put a stop to the company’s alleged unlawful practices and provide restitution for consumers.
According to the complaint [PDF], the Dallas-based company falsely advertises a general-use credit card, that in actuality can only be used to buy products from the company.
The Bureau alleges that the vast majority of the company’s revenue is generated from selling the particularly useless buying-club membership card. And while most consumers never use the membership card, they cannot recoup their membership fees − $37 if they apply through the mail or $95 if they apply online.
Since it began offering the card in 2004, the Bureau estimates that Union Workers Credit Services has collected membership fees from hundreds of thousands of consumers throughout the United States, totaling millions of dollars.
In addition to unfairly charging consumers fees for a card they can’t use, Union Workers Credit Services also deceptively implies in advertisements that it has an affiliation with unions by using pictures of nurses, firefighters, and other public servants, the CFPB alleges.
Finally, the suit claims that the company misused consumer credit reports.
While companies can use credit reports to target certain advertisements to consumers without advance consent, they must provide an option in which people can for opt out of receiving marketing materials. However, the CFPB says the Union Workers Credit Services did not provide that opportunity.
According to the CFPB, thousands of consumers have filed complaints with law enforcement agencies and the Better Business Bureau regarding Union Workers Credit Services.
Additionally, the company has previously been sued by multiple government entities, including the New York State Attorney General and the U.S. Postal Service.
CFPB Sues Texas Company for Sham Credit Card [CFPB]
by Ashlee Kieler via Consumerist
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