Posted on 12/31/2004 11:02:47 AM PST by Uncledave
NEW YORK (Reuters) - Minnesota's attorney general has sued credit card issuer Capital One Financial Corp. (NYSE:COF - news), accusing the big U.S. credit card issuer of falsely advertising low rates and defrauding consumers.
Attorney General Mike Hatch said Capital One nearly quadruples the rate it charges some card customers who trigger a "penalty" rate by paying a bill a day late or defaulting in other ways, according to a complaint filed on Thursday in a Ramsey County District Court in Minnesota and posted on Hatch's Web site.
A spokesperson for Capital One, based in McLean, Virginia, could not be immediately reached for comment. A spokeswoman told the Star Tribune newspaper of Minneapolis that the company "believes it has acted properly and in full compliance with the law," and is cooperating with the attorney general.
According to the complaint, cardholders who receive an initial 4.99 percent interest rate and later default may see their rate skyrocket to 19.8 percent, even though Capital One advertised that the lower rate was "fixed."
The lawsuit said Capital One's marketing violates state laws against false advertising, consumer fraud and deceptive trade practices. Minnesota is seeking restitution for cardholders, civil penalties, disgorgement of profits, and an injunction barring further wrongdoing.
A day late in payment is not a "default."
Capitol One has all sorts of "house rules" and unwritten rules that they do not disclose and will not disclose even if you demand to be informed of all of their "regulations."
I have dealt with them many times and they are crooks. Unfortunately, the people who you deal with on the phone are the peons who catch all of the flack because they never allow you to talk to anyone above the phone attendant's immediate supervisor.
I just found out they bumped my rate to 28.99. outrageous. I am killing myself to get those bastards paid off as soon as possible.
And don't talk to me about the fine print. I know- I know!
Yes. It is worth a try to ask them to waive the increase. I did this once, was successful, later found the statement to my chagrin.
That's the fun part.
Think CASH!
" Yes, but the fine print usually reads just like those privacy notices on programs downloads and software envelopes"
I'm not defending Capital One...just saying if your going to get a credit card, then you should read all the fine print. Since in the end it comes down to personal responsibility. If "you" (using this term generically) don't understand the legal terminology call the 1-800 number and they will go over the terms.
Move the debt as soon as possible.
This reminds me of a $75 parking ticket I received in Chicago. I was late paying and saw a 100% penalty. I had to pay $150 for parking legally (I had no time to go to court to contest it). Don't you love big government?!
They ALL do it. I have a rather checkered payment history with my plastic--I ran up about $22,000 in debt when I was young and stupid, and will be paying for it for years to come--and actually, Capital One was the only company that worked with me. I had a $5,000 card maxed out, and I ended up working a deal with them where they closed the card, fixed the monthly payment, and dropped the interest rate to 13.9%. That card will be paid off very soon.
The irony is, when I got the Cap One card and started getting in trouble with it, I *worked* there, contracted in their IT department. And now, eight years later, I'm going back. They're really not much different than any of the other big plastic companies when it comes to usury.
Citi, FWIW, is merciless with penalty rates. We're talking 25.9%. And they don't come back down.
The rates are spelled out in the fine print of the documents that you get with the card, or the application. Always read EVERYTHING you get, regardless of how unimportant it looks. They warn you about it, it's your responsibility to know that. Caveat emptor.
}:-)4
It does pay to go up the chain of command. I have been able to get many credits that the customer service people told me were "not possible". You have to be persistent & keep trying until you get what you want.
Working at Capital One (IT department) for a few years taught me a bit about stuff like that. They have a constant battle going on to find ways to squeeze more money out of "good" customers that don't use their cards, or pay them off every month. They mooted, at one point, charging an annual fee to any customer that had a card and didn't use it at all for a one-year period, even "no annual fee" cards. If you used the card once and paid it off, you were golden, but if it sat idle for a year, they'd nail you for a fee. I never knew whether they actually did it or not.
And yes, they generally dislike people that keep their cards paid off. Ones like me--the customers that ran them up to the limit and then got behind on their payments, but not far enough behind to default or go bankrupt--they love.
Let me tell ya, being 38, married, and unable to save much for retirement because I'm still digging out from over $20,000 of credit card debt, sucks. It's a long, hard, crushing slog.
}:-)4
All you need is a history of their screw ups, which are all over their computers with us.
It's like a marriage counselor I heard on the radio years ago said if you are married ladies, don't divorce you husband and get another one, one's as bad as another...Cell companies are the same.
We have 6 phones altogether and have to have them working to do business efficiently.
Actually I don't believe that's true. You may be making the payment 30 days after the purchase, but in some cases it takes merchants like 60 days to get paid, so the CC guys are STILL getting paid before the money has to go out, and can collect interest in the meantime (in addition to the 3% or so of the transaction in the first place). They seem to have all the angles covered.
Good point, I didn't think of that.
But the part about the person with the card not paying any interest is true. And deadbeat is an insider term they use as I described it.
I have had many credit cards and I still have many credit cards. I have been around the block with everybody. Quite honestly I am very surprised that Capital One is getting hit with a lawsuit. As for Household one month I got extremely busy and I forgot to pay the bill. I acknowledged the over sight and sent them a monster payment for that month and each of the next three months. Meaning there was enough to get me below the credit limit and pay the bill for that month. Do you know that for the next three months I got nailed with an over the limit fee even though each time I was below the credit limit. The other cards to avoid are Bankfirst and Providian. Providian I am checking to see if the interest rate that they are charging is legal in New Jersey. Bankfirst if you exceed the credit limit by a penny and it could be by some dopey fee they charge they will start in with the the harassing phone calls before the bill ever gets to you. Bankone, I am saving the best for last, I paid them off and canceled the card, a month goes by and I go out and get my mail and do you know that they billed me a dollar because there was still interest within the month in question. So Duchess47 you can add Providian, Bankfirst and Bankone to your list of companies never to do business with.
It's exactly these sorts of "conflicts" between producers and consumers that convinces me some people can't be allowed to make decisions for themselves.
Where's the balance? I'm not sure.
Maybe the "age of majority" should be variable, or maybe people need to prove some level of competence before they can get a credit card.
I've always done well with Capital One. If you follow the rules they give, you end up with a great deal.
Now because someone screwed up, the rest of us will lose out.
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