CompuCredit, a sub-prime Visa credit card marketer, has ruffled the Federal Trade Commision's feathers.
In a move that some card holders deem intrusive and downright offensive, CompuCredit kept track of its cardholders' purchases and screened them for risky behavior. Cardholders who paid for certain goods and services with their credit cards were subject to lower credit limits.
What sorts of purchases did CompuCredit screen? Pool halls, massage parlors, and bars, for starters. They also cut credit limits on customers who made purchases from pawn shops, auto repair and tire retread stores, and direct marketing merchants. Worst of all, they also lowered limits on customers who sought marriage and personal counseling – a breach of confidential information.
CompuCredit is being accused of failing to adequately disclose this behavioral profiling and other hidden fees; abusing debt collection laws; and promising credit limits that were never given. Some cardholders were promised credit limits up to $3,250. However, half of this credit limit was withheld for the first 90 days – a fact that CompuCredit was allegedly deceptive about. The FTC filed a lawsuit against the company in June of 2008. You can read more details at the FTC's web site.
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