The Consumer Financial Protection Bureau is suing a Texas-based company, Union Workers Credit Services, for allegedly deceiving consumers into paying fees to sign up for a sham credit card.
Union Workers Credit Services, based in Dallas, falsely advertised a general-use credit card that, in reality, can only be used to buy products from the company, according to the CFPB.
"Union Workers Credit Services also deceptively implies an affiliation with unions by, among other things, using pictures of nurses, firefighters and other public servants in its advertising," according to the CFPB.
Hundreds of thousands of consumers paid membership fees, $37 through the mail or $95 for online applications, resulting in millions of dollars collected by Union Workers Credit Services, according to the CFPB. Most consumers never use the membership card but cannot recoup their membership fees.
The lawsuit seeks compensation for victims, a civil penalty and an injunction against the company.
Thousands of consumers have filed complaints with law enforcement agencies and the Better Business Bureau about Union Workers Credit Services. The company also has been sued by multiple government authorities, including the New York State Attorney General and the U.S. Postal Service, according to the CFPB.
The majority of revenue for Union Workers Credit Services is generated from selling a buying-club membership card that it falsely advertises as a general-purpose credit card.
The CFPB, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, has the authority to take action against companies violating federal consumer financial laws, including engaging in unfair, deceptive or abusive acts or practices. The lawsuit seeks compensation for victims, a civil penalty and an injunction against the company.