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.
Of course, those are all costs of business and will end up getting added into the prices we pay, so all consumers actually pay for the cost of borrowing the money, just those who carry a CC balance pay twice.
I bet they wanted cold cash as well. Paying the local government is like paying loan sharks. Legal tender only.
Shouldn't be a day late !!Sounds like dumbing down when grading students.
Thanks, I'll do that.
Providian did the same thing to me with the interest rate. Yes by the way did look at your profile. Wishing you a belated Happy Birthday. Mine was the 24th by the way.
Red
Bankers - you know. But not all bankers are BANKERS. Some, you'd think, are actually decent people. Tend to be small banks, though. I'm sure there's a Jimmy Stewart/Bailey S&L somewhere out there, even now.
Yes, which is why I consolidated my credit cards to one (Citibank) and then give them authorization to debit from my checking account for the minimum payment. That way, if my mailed payment (with minimum payment subtracted) fails to arrive on time, to debit will protect me. If they don't take the money out of the bank which I've authorized them to do before the due date, that's THEIR fault, not mine.
I've joined a class action suit against Fleet Bank for their dirty practices regarding credit cards. That's in the settlement phase. Household Bank was another one with shady rules.
Actually, all of these companies have ways to scam you if you don't pay your balance in full or on time every month. You do have to watch the fine print because they've given themselves license to jack up your interest rate at the first sign of concern.
The interest rate is 9%, but with a balance of 3% of the credit line, who cares?
Part of my problem with Fleet Bank was that no matter how soon I sent off my payment, it magically posted the day *after* my due date so I could be dinged for a late fee. If you then call and complain about the late fee, they will cheerily take off the charge "this time" but you've still been hit with the interest on the higher balance and put your account in jeopardy of having your interest rate jacked.
I listened as they explained they have a very secure payment system that posts payments as soon as they get them and that I should trust their accurate record-keeping. This was the same company who sent me a new card two months after I had closed the account.
After I closed it, I sent letters to the Better Business Bureau and every member of the U.S. House and Senate banking committees. I received several letters and a refund check. But it's all the folks who don't pay attention to their bills that they count on to make their scam profitable. And the government is not going to crack down on them so long as they make sizeable campaign contributuons to your favorite Dems and Pubs.
You fight psychologically much the same way I do, though it sounds as if you may be a little more practiced at it. I love the dead air trick.
That's about all that needs to be said. That is what they depend on.
If they are following the terms of the contract, I have no problem. If the AG wants to force them to change the terms (by offering a longer grace period) then they won't be able to offer low rates to people who pay on time.
A system (voluntary, at that) which rewards responsibility and punishes sloppiness seems like a GOOD thing.
I can't help myself - I'm just a dumb Republican ;'}
The Minn AG must be a headline seeker. Being an AG used to be a quiet job for an attorney. Now, it's a stepping stone to gov. or higher.
As far as credit card rates, I say let the buyer decide on his or her card and what it has for rates and services. There are so many available, we dont' need an AG to hold our hand when getting one.
We sent in too much money to a plastic company a number of years ago and ended up with a +$10 balance.
Sure enough, a month later we started getting service charges on our 'balance'. That one was actually fun to straighten out.
"And if you pay every month in full, the CC companies refer to you as a "deadbeat" because you get to borrow money for free for 30 dayz."
Most cards are at 25 days and all seem to be moving towards 20 days grace.
What ever happened to usury laws?
I wouldn't know. I pay online far enough ahead of time that I know if there's a problem well before the due date.
Ah. Well, if one must carry a credit-card debt, I suppose that is the way to do it.
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