Texas AG sues CrossCountry deceptive credit practices

Posted by Bob3 (68.95.154.241) on June 06, 2004 at 02:29:29:

This type of thing happens only if you stay on the AG's butt and everyone reports every occurrance. Don't think "someone else" is reporting so you don't have to -- everyone must report, every thing over and over. -- Bob3

+ + + + +

Texas Attorney General Greg Abbott has sued a Delaware-based bank that markets credit cards to Texas consumers who have low incomes or tarnished credit records.

Cross Country Bank Inc. and its affiliate, Applied Card Systems Inc., allegedly prey on low-income consumers with poor or no credit ratings, promising them credit cards with high credit limits and an opportunity to improve their damaged credit records, according to a statement issued by the Attorney General's Office.

In reality, according to the statement, the credit cards carry exorbitant fees and other hidden costs that often lead consumers into worse financial situations.

"These companies engaged in egregious and offensive tactics against Texans who sought to establish decent credit ratings and improve their livelihoods," Abbott says. "As it turns out, the companies succeeded in padding their pockets and making life miserable for these consumers. I'm asking for the court's help in protecting all Texans from these abusive practices."

Representatives of Cross Country Bank couldn't be reached for comment.

According to the lawsuit, the company advertises that consumers will receive credit limits up to $2,500, but in reality, most obtain limits as low as $200 to $400, with an interest rate of about 20 percent.

In addition, upon opening an account, a consumer is charged an origination fee, an annual fee and other charges that consume half or more of a consumer's credit line, the AG's office claims. Many consumers also incur additional fees when, without their knowledge, they are enrolled by Cross Country Bank in membership programs.

Abbott says most consumers aren't aware of these charges, causing them to unwittingly exceed their credit limits, which results in additional fees. Ultimately, a downward spiral results in which consumers never gain control of their accounts as the finance charges, over-the-limit fees and other charges continue to accrue.

As customers get deeper in debt, Cross Country Bank's affiliate, Applied Card Systems, then begins harassing consumers, their family members and even complete strangers with repeated and sometimes threatening or obscene telephone calls seeking to collect outstanding debts, the AG's office says.

The companies were founded and are owned by Rocco Abessinio of Boca Raton, Fla., who is a defendant in the suit.

The attorney general is seeking an injunction to stop the practices, as well as civil penalties of $20,000 for each violation of the Deceptive Trade Practices or Debt Collection acts, restitution for harmed consumers and reimbursement for legal fees.

At least three other states, Minnesota, Wisconsin and New Hampshire, have filed similar suits.

Follow Ups:

Post a Followup