I like the statement by First Premier which says they did the same thing others were doing, and it was commonly accepted in the credit card industry. Here is the article:
NEW YORK, Aug 15 – First Premier Bank agreed to refund $4.5 million to settle a probe into the marketing of credit cards to consumers with poor or no credit histories, the New York State attorney general said on Wednesday. The South Dakota-based bank will also pay $105,000 in penalties and costs, Attorney General Andrew Cuomo’s office said in a statement. The company also agreed to reform its billing and marketing practices, the AG’s office said.
In a separate statement, First Premier said it disagreed with the “characterizations made by the New York attorney general.” “These were common business practices within the industry and we discontinued these practices on our own initiative a number of years ago,” Premier Bankcard Chief Executive Miles Beacom said in the statement. (First Premier Bank and Premier Bankcard are sister organizations under the holding company of United National Corp.)
The AG’s office said its probe, begun after consumer complaints, found First Premier Bank lured customers by falsely representing that they were pre-approved for a credit limit of up to $2,000 at a 9.9 percent fixed interest rate. The bank also told consumers it would not charge a processing fee for opening an account, the AG’s office said. But most consumers received a credit line of $250 to $300 at a 9.9 percent interest rate that could more than double without notice, the attorney general said, adding that the company also billed $178 upfront fees for processing the credit card application.
Most consumers reported their balances ballooned within a few months, in some cases from $20 to $400 due to hidden fees, the AG’s office said.