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Credit card suit calls Capital One predatory

Capital One secured card come-ons are "deceptive," 12 claim.

By SCOTT BARANCIK, Times Staff Writer
Published January 26, 2008

Capital One's comical TV ads ask, "What's in your wallet?" But if your billfold includes a Capital One secured credit card, you may not be laughing so hard.

According to a lawsuit filed in Tampa, thousands of Floridians with iffy credit histories who own a Capital One secured credit card have had to pay "unearned, unwarranted and deceptive" fees. The suit alleges a variety of predatory practices:

- Capital One tells potential customers that they have been pre-approved for a credit card with a spending limit of up to $500 but ends up giving the vast majority no more than $200.

- The McLean, Va., bank bills unsuspecting applicants $49 for a "security deposit" that can never be recovered, and $39 or more for an annual membership fee. The combined charges reduce a $200 spending limit to $112.

- When a cardholder exceeds a spending limit or falls behind on payments, Capital One typically offers to send additional cards - each with its own annual fee - rather than raise the original card's spending limit.

The plaintiffs - 12 cardholders from Hillsborough, Citrus and Lee counties - say they will seek to have their lawsuit certified as a class action. If successful, any Floridian who has held a Capital One secured credit card at any time since 2001 would be eligible to join the complaint.

Capital One spokeswoman Tatiana Stead declined to comment on the case. But similar lawsuits filed against Capital One by the same Little Rock, Ark., lawyers, Brent Walker and Steven Owings, have met with little success elsewhere. An Arkansas judge rejected the attorneys' bid to certify a national class of victims but approved a statewide class in 2005; the case was later settled. Suits the pair filed in California in 2006 and Texas in 2007 have since been dropped.

Capital One has not yet responded to the Florida lawsuit, other than to request that it be moved from county to federal court. In the Texas case, however, the financial services company argued that its credit card practices were "explicitly disclosed" in the documents sent to prospective customers. Capital One also claimed that credit card contracts were not covered under the state's deceptive trade practices law.

Plaintiffs' attorneys Walker and Owings did not respond to interview requests. Attempts to interview some of the seven Hillsborough County plaintiffs through Tampa co-counsel Kevin McLaughlin were unsuccessful.

Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.

What's a secured credit card?

They're typically for consumers trying to repair weak credit history. With a secured card, a consumer must deposit an amount of money equal to the credit limit of the card into a bank account. If the cardholder fails to pay an outstanding charge, the card issuer can deduct the amount directly from the account. Once a responsible track record is established, cardholders usually can switch to a traditional credit card.

[Last modified January 25, 2008, 23:00:35]