Cardholders of Continental Finance Co. are due refunds of excess fees that absorbed more than 25 percent of credit limit
The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.
The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.
Nearly 100,000 cardholders of Continental Finance Company LLC will split a refund of $2.7 million in excess fees charged by the company, the U.S. Consumer Financial Protection Bureau announced.
“These excessive fees are especially harmful because the cards were targeted to consumers with subprime credit who are often economically vulnerable,” CFPB Director Richard Cordray said in a statement announcing the crackdown.
Continental will also pay a $250,000 fine to the consumer protection agency, and will be subject to its supervision.
Cardholders and former cardholders should receive a credit to their account or a check in the mail for their refund, without having to make a claim, the CFPB said. The offending cards were issued between April 2012 and July 2013. The average refund comes to about $28 for the 98,000 cardholders who are due money back.
Recipients of Continental’s cards usually received a credit limit of $300 and paid a $75 maintenance and setup fee, the CFPB said. Subsequent “paper statement fees” of $4.95 a month violated the legal fee maximum. Such low-limit, high-fee terms are known as fee-harvester cards.
Continental Finance also misled some cardholders about the cost of the paper statement fee, which was automatic unless they went online and opted out of receiving paper statements, the CFPB statement said. Continental Finance consented to the penalties without admitting wrongdoing.
The enforcement action does not appear to have broader applications to other fee harvester cards. Some other subprime issuers collect more than 25 percent of the credit limit in fees by designating some fees as pre-account opening fees, putting them outside the time frame defined by the Credit CARD Act.
See related:Credit CARD Act: Round 2 coming?