WASHINGTON—The Consumer Financial Protection Bureau sued Dallas-based Union Workers Credit Services for allegedly deceiving consumers into paying fees to sign up for a “sham” credit card.
The CFPB alleges the company falsely advertises a general-use credit card that can only be used to buy products from the company, deceptively implies an affiliation with unions in its advertising, and misuses consumer credit reports, the Bureau stated.
The lawsuit seeks compensation for victims, a civil penalty, and an injunction against the company.
“The business model for Union Workers Credit Services is built on duping consumers into signing up for a sham credit card,” said CFPB Director Richard Cordray. “Hundreds of thousands of people, including a great many union members who were specially targeted, have been tricked into spending millions of dollars for a so-called credit card that can really only be used to buy the company’s own products. From the misleading photos of nurses and firemen on its website to its bogus credit card, Union Workers Credit Services is illegally deceiving consumers.”
The Bureau alleges that the vast majority of Union Workers Credit Services’ revenue is generated from selling a buying-club membership card that it falsely advertises as a general-purpose credit card. “Most consumers never use the membership card but cannot recoup their membership fees − $37 if they apply through the mail or $95 if they apply online,” the CFPB stated. “Union Workers Credit Services has collected membership fees from hundreds of thousands of consumers throughout the United States, totaling millions of dollars.”
In a separate action, the CFPB Wednesday also filed a lawsuit against Sprint Corporation for allegedly illegally billing wireless consumers tens of millions of dollars in unauthorized third-party charges.