WASHINGTON The Consumer Financial Protection Bureau is seeking to permanently ban a credit provider in Texas from offering any services because of allegations that it ran a "sham credit card" business.
The pending consent order released Feb. 3 claimed that Union Workers Credit Services signed up "thousands of consumers" for a credit card that was actually limited to purchasing only its products and had a shady annual membership fee process. The company has agreed to pay a $70,000 penalty without confirming or admitting to the allegations.
"Union Workers Credit Services deceived consumers into paying fees to sign up for a sham credit card," said CFPB Director Richard Cordray in a press release. "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."
The CFPB said the company falsely advertised a buying-club membership card as a general purpose card. In doing so, union workers thought they were getting a typical credit card that can be used for most purchased but could instead be used only to purchase products from the company.
"Most consumers never used the membership card but could not recoup their membership fees," the CFPB said.
The agency also claims that Union Workers Credit "deceptively implied" that it was affiliated with other unions by depicting public servants like firefighters and nurses in its advertising. The company's website still has a picture of public servants with a notice that the site is down for "temporary maintenance."
The CFPB's lawsuit, first filed in December, follows a string of other suits filed by government agencies including the New York State Attorney General. The CFPB's order is pending approval in the U.S. District Court for the Northern District of Texas in the Dallas Division.