Girard Gibbs filed a class action lawsuit on behalf of customers of Providian Financial credit card services, alleging that Providian engaged in a variety of fraudulent business practices in violation of the Truth in Lending Act and other laws.
Providian used telemarketing and mail campaigns to target customers with troubled credit histories. Plaintiffs alleged that Providian’s
advertising campaigns made offers of increased credit and credit repair, but failed to disclose the associated fees and conditions.
Specifically, the lawsuit alleged that Providian aggressively marketed fee-based programs, such as discount or credit protection plans, to customers with poor or no credit history. Plaintiffs contended that these programs, which cost up to $149 a year, generally did not offer significant benefits to the targeted customers. For instance, they alleged that Providian’s credit protection plans, which allowed customers to freeze their accounts if they became unemployed or disabled, were marketed and charged to the accounts of customers who were already disabled. Plaintiffs claimed that Providian charged customers for these fee-based programs without their authorization and made false and misleading statements regarding the nature of the programs.
In addition, although Providian’s promotional materials advertised credit repair through use of a Providian credit card, the lawsuit contended that Providian’s payment-processing procedures led to the improper assessment of late fees, which actually damaged customers’ credit.
On November 7, 2001 the Court granted final approval to a $105 million cash settlement, the largest all-cash settlement reached on behalf of credit card holders for unfair marketing and billing practices.
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