Providian Financial Corp., which has been plagued by lawsuits and related bad publicity, said it had a net increase of 1.1 million accounts during the second quarter.
In an earnings announcement Thursday, Providian said it had discovered a "programming error" that had resulted "over a period of months, in the billing of erroneous late fees related to specific weekend days." Providian said it has fixed the problem, and took a one-time charge of $20 million to cover the cost of refunds.
"We believe that these incorrectly billed late fees were an underlying cause of recent customer concerns," said Shailesh Mehta, chairman and chief executive officer of Providian.
The credit card company has been under investigation by the San Francisco district attorney for practices related to late fees and disclosure of fee-bearing product add-ons. Several cardholder and shareholder lawsuits were filed over these issues, and the company announced an enhanced "customer satisfaction program" in which it pledged to refund fees customers considered unfair.
Providian said its second-quarter net income doubled, to $126.5 million. Managed loans grew by $1.9 billion during the quarter, to $16 billion.