CFPB Seeks Court Approval of Consent Order Shutting Down Alleged Sham Credit Card

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Last December, the CFPB sued a Texas-based company, Union Workers Credit Services, alleging that the company deceived consumers into paying fees to sign up for a “platinum card” that purported to be a general-use credit card but, in actuality, could only be used to buy products from the company. See our prior post discussing the CFPB’s complaint here.

Yesterday, the CFPB requested court approval of a stipulated consent order that would impose monetary penalties on the company in the amount of $70,000, and permanently ban the company from offering any consumer credit products or services. Surprisingly, the consent order does not include any remediation for the company’s cardholders, although the CFPB’s announcement of the consent order states that such cardholders may be eligible for relief from the CFPB’s Civil Penalty Fund in the future.

The consent order also addresses allegations that the company had falsely advertised an affiliation with labor unions. Specifically, the consent order would prohibit the company from making any misrepresentations that it, or any consumer financial product or service it might offer, are associated with labor unions, including, but not limited to, through use of union-related words or images. In addition, the consent order would enjoin the company from violating the Fair Credit Reporting Act, which the CFPB alleged the company had violated by using consumer reports without the consumers’ consent. In light of the fact that the CFPB has permanently banned the company from offering any consumer credit products and services, these additional proscriptions in the consent order seem superfluous.

In its announcement of the consent order, the CFPB claimed that thousands of consumers had filed complaints against the company with law enforcement agencies and the Better Business Bureau, and further noted that the company has been sued by several government authorities, including the New York Attorney General and the U.S. Postal Service.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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