CompuCredit Corp., the Atlanta-based subprime credit card issuer that was sued yesterday by the Federal Trade Commission and faces charges by the Federal Deposit Insurance Corporation, issued a pointed response to the allegations by the federal agencies.
The FTC lawsuit and FDIC actions relate to the company's past credit card marketing practices, and to practices by its subsidiary collection agency, Jefferson Capital Systems LLC.
"The claims asserted by the FTC and FDIC regarding CompuCredit's past credit card marketing practices are untrue and without merit," the company stated. "The credit card programs at issue complied with applicable laws and regulations and have exemplified best practices in credit card marketing."
In fact, states CompuCredit, "the FDIC repeatedly determined over the years now at issue that the marketing materials fully disclosed fees and terms in compliance with consumer protection laws. Our disclosures regarding available credit have been consistent even with recently issued proposals by the Federal Reserve for credit card disclosures.
The agencies "do not dispute that our solicitations have always complied with the express requirements for the disclosures of fees and other terms set forth in the Truth in Lending Act and Regulation Z," the company said. "Therefore, CompuCredit intends to vigorously contest these unsupported allegations and is confident that it will prevail."
The company asserts that the restitution claims asserted by the FDIC and the FTC – estimated to exceed $200 million – "largely involve amounts that were never paid by consumers. In any event, CompuCredit expects that any resolution of this matter will not have a material effect on our financial condition, given that any resolution is likely to involve issuing credits for amounts that were never collected."
With regard to the collection practices allegations, "Jefferson Capital denies any wrongdoing and insists that its collection practices are fully compliant with all applicable state and federal laws and regulations. We repeatedly asked the FTC to provide us any proof of these allegations. We are disappointed that the agency has yet to share with us any factual support for these claims."