Abbott joins Miller in slugging high-risk creditors
AUSTIN -- The low end of the credit market is taking a hammering from some state attorneys-general these days.
Latest to wield the stick is Texas Attorney General Greg Abbott, who today won a final judgment against a credit card issuer that targeted "consumers with low incomes or tarnished credit scores."
Delaware-based Applied Card Bank (formerly Cross Country Bank) must pay the state $1.3 million in fines and fees to resolve a case that took two-and-a-half years to pan out.
Applied Card Bank must also refund or credit eligible customers and cease "misleading consumers about their cards," Abbott said. He accused the bank of employing "lower-than-advertised credit limits, hidden fees and abusive debt-collection practices."
Iowa Attorney General Tom Miller is already on board this bandwagon. He filed suit late last week against Davenport-based used car dealer and financer Aardvark, alleging it targeted "vulnerable, lower-income consumers with poor credit or no credit histories."
The suit also charged Aardvark with, among other things, "deliberately misleading consumers" in advertising and promotion, refusing to honor warranties plus numerous violations of Iowa's Consumer Credit Code.
Miller also last week reiterated his annual call for the Iowa legislature to cap the interest rates for so-called "car title loans" at 21 percent. "We've heard of interest rates up to 360%, and right now there is no limit whatsoever," Miller told Iowa lawmakers.
Car title loans are typically used by lower-income consumers without access to mainstream credit who need short-term cash loans.
Abbott first filed suit against what was then Cross Country Bank in June 2004 alleging its credit card business "preyed on consumers with no credit or bad credit ratings."
Its customers, Abbott alleged, were also assessed hidden fees and charges and high interest rates, leading many "into a downward [financial] spiral."