Alleged deceptive sales and marketing practices have resulted in America's sixth biggest credit card issuer, Providian Financial, agreeing to pay at least $300m in compensation to customers.
The ruling, published on Wednesday by the Office of the Comptroller of the Currency, affects hundreds of thousands of Providian customers who were allegedly harmed by the company’s unfair practices. According to the OCC, Providian subsidiary Providian National Bank, engaged in a "pattern of misconduct" regarding the marketing and terms of its credit cards.
"Consumers should not have to become detectives to find out the true terms and conditions of their credit card agreement," said an OCC executive. "They should not discover after they receive their monthly statement that they have purchased a $156 credit protection policy that they neither want nor need. And if they are promised a promotional bonus for transferring credit balances, they should receive that bonus - and not be told after the fact that the program requires a balance transfer of $10,000."
The settlement equates the interests of consumers with important regulatory goals, said the OCC, which stressed that it will not tolerate abuses that breach trust through unfair and deceptive practices.
Providian confirmed on Wednesday that it had settled with the OCC and had also agreed to make certain business changes and pay a $5.5m civil fine to the San Francisco District Attorney's office.
News source: Financial Times