CFPB Asks Court to Close Down Sham Credit Card
The Consumer Financial Protection Bureau is taking action against Union Workers Credit Services for convincing consumers to sign up for a sham credit card. The lawsuit was first issued in December of 2014, but the bureau requested a consent order on Tuesday to settle the case.
The CFPB claims that much of Dallas-based company’s revenue came from the sale of a card falsely advertised as a general-purpose credit card. The card could only be used to purchase products sold through the company, not anywhere else. While most people who signed up for the card simply didn’t use their accounts, many were discouraged by the fact they could not get a refund on their membership fees.
Thus far, consumers affected by the sham credit card deal have filed thousands of complaints with the Better Business Bureau and local law enforcement agencies trying to get their money back. Union Workers Credit Services is already facing lawsuits from several government organizations, including the New York State Attorney General and the U.S. Postal Service.
“Union Workers Credit Services deceived consumers into paying fees to sign up for a sham credit card,” said CFPB Director Richard Cordray in a statement. “The Bureau is taking action to shut down this company’s bogus credit card operation that targeted union members and permanently ban it from offering future credit products.”
If the action is ruled in favor of the CFPB, Union Workers Credit Services will no longer be able to issue credit products to their consumers, even if they are transparent about how their cards operate. The company will be asked to pay a $70,000 penalty fee to restore funding to the consumers affected by the scam.