Union Workers Credit Services (UWCS) doesn’t offer open-ended credit services and isn’t affiliated with union workers, according to the Consumer Financial Protection Bureau. Back in December, the Bureau sued UWCS, alleging that the Texas-based company sold a “sham credit card.” This week, the Bureau asked a federal court to impose a $70,000 penalty on the company and to bar it from offering consumer credit products in the future. While UWCS card [delete “card”?] may be an extreme example, the action and proposed consent order show that the Bureau is interested in ensuring that the difference between open- and closed-ended credit products is made clear to consumers.
UWCS marketed a product, through direct mail and its website, described as a “platinum card” with a $10,000 credit limit and a 5% annual percentage rate. The Bureau alleged in its complaint that this marketing “explicitly or impliedly” offered a general-use credit card similar to a Visa- or MasterCard-branded card that would allow consumers to access open-ended credit to be used to make purchases from retailers unaffiliated with UWCS. In reality, the Bureau said, the product was a membership card that provided closed-ended, purchase-specific credit that could be used only to purchase products UWCS sold through a catalog or other means. “Hundreds of thousands of consumers” paid $37 for the card if they applied by mail, or $95 if they applied online. UWCS also misrepresented an affiliation with labor unions by advertising itself as “providing credit services to the Union Workers of America,” using images of police officers, firefighters, and other workers in its marketing, and asking new enrollees to identify their union affiliations, according to the complaint. And finally, the Bureau alleged that UWCS used consumers’ credit reports to select recipients of its offers without the consent of the recipients. On these bases, the complaint asserted deceptive practice claims under the Consumer Financial Protection Act, and violations of the Fair Credit Reporting Act. The proposed consent order would impose a $70,000 civil monetary penalty on UWCS, and permanently bar the company from marketing or selling any credit products or charging any consumer new or renewal membership fees.
Thousands of consumer complaints have been lodged against the company with the Better Business Bureau and law-enforcement agencies since 2009, many stating that they believed UWCS would provide them with a general-use credit card, the Bureau said in its complaint. UWCS has been sued by multiple other government authorities, including the New York State Attorney General and the U.S. Postal Service.