WASHINGTON—After suing Dallas-based Union Workers Credit Services for allegedly deceiving consumers into paying fees to sign up for a “sham” credit card, the CFPB has taken action to shut down the company’s card operations.
The CFPB has asked a federal district court to enter a consent order that would permanently ban the Texas-based company from offering any consumer credit products or services after it duped thousands of consumers into signing up for a sham credit card. The order would also require the company to pay a penalty of $70,000.
“Union Workers Credit Services deceived consumers into paying fees to sign up for a sham credit card,” said CFPB Director Richard Cordray in a statement. “The Bureau is taking action to shut down this company’s bogus credit card operation that targeted union members and permanently ban it from offering future credit products.”
In December, the CFPB filed a lawsuit against Union Workers Credit Services alleging that the vast majority of the company’s revenue was generated from selling a buying-club membership card that it falsely advertised as a general-purpose credit card. In reality, the card could only be used to buy products from the company, the CFPB reported.
“Most consumers never used the membership card but could not recoup their membership fees. Union Workers Credit Services also deceptively implied an affiliation with unions by, among other things, using pictures of nurses, firefighters, and other public servants in its advertising,” the agency said in a statement.
Thousands of consumers had filed complaints with law enforcement agencies and the Better Business Bureau about Union Workers Credit Services. The company has also been sued by multiple government authorities, including the New York State Attorney General and the U.S. Postal Service.
In a separate action, the CFPB ordered the Newark, Delaware-based Continental Finance Company LLC, a subprime credit card company based in Delaware, to refund an estimated $2.7 million to approximately 98,000 consumers who were charged illegal credit card fees.
The agency found that the company’s “fee-harvester” subprime credit cards misrepresented certain fees and hit consumers with illegal charges. The order also requires the company to pay a civil penalty of $250,000.
“Continental Finance misled consumers and charged them illegal fees,” said Cordray. “These excessive fees are especially harmful because the cards were targeted to consumers with subprime credit who are often economically vulnerable. We will act to protect people who are wronged in this market.”
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