Providian Financial Corp., the sixth-largest credit card company in the United States, agreed in June to a deal with Connecticut's attorney general, who was investigating unjustified finance charges and late fees, misbillings, and charges for add-on services without the customer's clear consent.
Providian admitted no wrongdoing, but it did agree to pay $1.6 million to the state and to compensate cardholders who were harmed.
Then, the San Francisco district attorney and the Office of the Comptroller of the Currency announced that a yearlong investigation showed that the bank had "misled and deceived customers in order to increase profits."
Providian again admitted no wrongdoing but agreed to pay more than $300 million to hundreds of thousands who were allegedly misled between June 15, 1995, and June 28, 2000.
The customers will get refunds for fees and interest paid on certain Providian products, which officials are currently calculating. If you're covered, you don't have to do anything. Providian will come up with a list of affected cardholders, and the OCC hopes all checks will be mailed by the end of September.
Even if you've never carried a Providian card, you can learn from the evidence uncovered by the feds. Knowing telemarketers' strategies can help you identify red flags when you're assessing a credit card pitch.
The OCC says that one Providian program promised to beat the rate customers were paying on their current card. Telemarketers talked about "great savings," but were instructed never to get specific.
Actually, the OCC says, the plan shaved only 0.3 to 0.7 percentage point. And to get that saving cardholders had to send in proof of their current rate; otherwise, the OCC says, Providian charged as much as 21.99 percent.
Another questionable perk: The OCC says that Providian didn't adequately disclose that its "no annual membership fee" card was available only to customers who paid $156 per year for a credit-protection plan. Alan Elias, Providian's vice-president of corporate communications, says that condition was included in the cardholder's contract information.
If you have problems with your credit card company, complain first to the bank. If you don't get satisfaction, call the OCC at 1-800-613-6743.