United States: CFPB Agrees To Consent Order With Texas Company That Issued Sham Credit Cards

On February 3, 2015, the Consumer Financial Protection Bureau asked a federal district court to enter a consent order that would permanently ban a Texas company, Union Workers Credit Service, from offering any credit products or services after it duped thousands of consumers into signing up for a sham credit card. The CFPB claims that Union Workers convinced thousands of customers to sign up for what they believed to be a general-purpose credit card that they could use anywhere, when in reality the product was a buyers' club card that they could only use to buy items from the Dallas-based company. The consent order would also require the company to pay a penalty of $70,000.

"Union Workers Credit Services deceived consumers into paying fees to sign up for a sham credit card," said CFPB Director Richard Cordray. "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."

While most consumers who received the card never used it, thousands were unable to recover membership fees from Union Workers once they realized the fraud. In December 2014, the CFPB filed a lawsuit against Union Workers alleging that the vast majority of the company's revenue was generated from selling the falsely-advertised buying-club membership card. The lawsuit also alleged that Union Workers deceptively implied an affiliation with unions by, among other things, using pictures of nurses, firefighters, and other public servants in its advertising. The company's website, which still has those pictures, is currently being redesigned.

Thousands of consumers had filed complaints with law enforcement agencies and the Better Business Bureau about Union Workers. The company has also been sued by multiple government authorities, including the New York State Attorney General and the U.S. Postal Service.

The CFPB's proposed consent order can be found at http://files.consumerfinance.gov/f/201502_cfpb_proposed-stipulated-judgement-and-order_union-workers-credit-services.pdf

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