Legal Action Against Providian (Credit Card Issuer) ***
Providian [now owned by Washington Mutual] is one of the top ten credit card issuers in the United States, issuing credit cards to those with mediocre or bad credit.
In the 1990s, the San Francisco District Attorney's office brought charges against Providian for illegal practices after numerous complaints had been received from consumers. What Providian was accused of doing was receiving payments from its customers but failing to deposit them for as long as a two week period so that they would be processed after the customers' due dates and the customers would be assessed a late payment fee and the customers' interest rates would be boosted to a more usurious rate. This tactic increased Providian's profits dramatically.
It is a sad fact that the San Francisco District Attorney's office had to prosecute Providian in the first place when there is a federal agency that is in charge of regulating the major credit card banks and should have done the prosecuting. The name of this government agency is the Office of the Comptroller of the Currency, or OCC, based in Washington, D.C. Not only did the OCC not prosecute Providian, but they tried to stop the San Francisco DA's office from doing so. The only reason the OCC failed in its attempt to stop the prosecution was the fact that the press and the public got wind of the matter and they couldn't do anything about it without looking like the bad guy. So, the OCC pretended to go along with the whole prosecution as though they were in favor of it. In fact, they tried to steal the San Francisco DA's thunder and take credit for the whole case when the truth is they were really on Providian's side.
Eventually, Providian was forced to pay the largest settlement that a credit card company has ever had to pay. Each and every Providian account was audited and a refund check was sent to every customer who was cheated. Perhaps you too received a reimbursement check from the District Attorney's office in San Francisco a few years back.
In the last decade, many Attorney General offices in dozens of states have stepped up their efforts to go after credit card issuers and stop their abusive and illegal practices. As a result, the OCC decided to put a stop to it once and for all since this organization is really behind the credit card banks and against the consumers. Therefore, in January 2004, the OCC declared itself the sole authority over all credit card consumer issues, squeezing out state consumer regulatory actions. You can still complain to your state AG office about the sleazy tactics your credit card company uses, but there is little your state AG's office can do about it thanks to the OCC.
*** Providian is now owned by Washington Mutual. Providian's legal troubles occurred before Washington Mutual purchased the company.