CFPB Sues Nonbank Company Over High-Fee Membership Credit Card

On September 13, 2024. the CFPB bro​ught suit​ in the Western District of Pennsylvania against the nonbank offeror of a consumer credit card and its CEO alleging that the terms of the company’s credit card violated the Consumer Financial Protection Act, the Truth In Lending Act, and Regulation Z. According to the CFPB, while the credit card was marketed as a regular credit card offering an unsecured open-end line of credit, it was in fact a membership card with monthly fees that could only be used to purchase goods from the company’s online store. The CFPB cited the high annual fee-to-credit-limit ratio, alleging that the company charged nearly $300 annually through its monthly membership fees, but the credit card itself usually came with only a $500 credit limit for the first year of membership. ln addition, the CFPB accused the company of making it very difficult for consumers to cancel the credit card, despite promising that it could be canceled over the phone in less than one-minute for a full refund.

​The CFPB’s lawsuit seeks both injunctive relief as well as a civil money penalty and damages.​​​