topic Re: First Premier is suing the feds in Credit Cards

First Premier is suing the feds

Jazzzy — Fri, 22 Jul 2011 16:17:28 GMT

First Premier is located in my vicinity, and this is an article that was in today's local paper. They are suing due to the new restriction on upfront fees they are able to charge.

http://www.argusleader.com/article/20110722/NEWS/107220316/1001/rss01

I don't know where you draw the line between doing business with a high-risk demographic vs predatory practices.

If First Premier is successful in this suit we may see companies go back to the pre-Credit Card Act time of doing business. I think most of the changes were good ones. (PS...I didn't know where to post this but thought it might be of interest to those here on the Credit Card board.)

ETA: The public's comments at the end of the article are quite colorful.

Re: First Premier is suing the feds

DI — Fri, 22 Jul 2011 16:27:06 GMT

They can afford to do an all out battle with the Feds given they are loan sharks.

Re: First Premier is suing the feds

RockinRay — Fri, 22 Jul 2011 16:29:23 GMT

- DI - Good one!

Nailed it!

Ray

Re: First Premier is suing the feds

trumpet-205 — Fri, 22 Jul 2011 16:29:50 GMT

Given how FP charges outrageous APR (59.9 to 79.9%), I failed to see how they need anymore money.

Re: First Premier is suing the feds

Anonymous — Fri, 22 Jul 2011 19:02:19 GMT

The market is the market.

Tony Soprano lends money when nobody else is willing to do that...but he charges a hefty vig for his risk.

The consumer makes his own choice.

I don't see FP forcing people into taking its cards.

And I don't see First Premier advertising itself as a best friend or a babysitter. FP lends money, at high rates and upfront fees, to people who cannot get it elswhere.

It's a free market out there. At least, it used to be.

Re: First Premier is suing the feds

LS2982 — Fri, 22 Jul 2011 23:27:05 GMT

@Anonymous wrote:
The market is the market.

Tony Soprano lends money when nobody else is willing to do that...but he charges a hefty vig for his risk.

The consumer makes his own choice.

I don't see FP forcing people into taking its cards.

And I don't see First Premier advertising itself as a best friend or a babysitter. FP lends money, at high rates and upfront fees, to people who cannot get it elswhere.

It's a free market out there. At least, it used to be.

Your score dictates what your options are. I've had FP in my wallet for 4 months now (49.9 APR) and they have not gotten 1 cent of interest from me. Yes it's BS to pay a fee to pay your bill but guess what?? If I wasn't stupid in the past about my credit I wouldn't be using FP. They help my credit score. So does Cap1 and Credit One. I have no negative comments for any of those banks because I knew full well what kind of fees they charged and took their products to HELP my credit. Next year, or maybe 6 months from now I wont need them anymore.

Re: First Premier is suing the feds

Booner72 — Sat, 23 Jul 2011 01:01:10 GMT

On one hand I'm grateful to FP like others have said. But on the other I feel trapped! I can't wait to close this card.

Re: First Premier is suing the feds

Open123 — Sat, 23 Jul 2011 01:52:18 GMT

@Anonymous wrote:
The market is the market.

Tony Soprano lends money when nobody else is willing to do that...but he charges a hefty vig for his risk.

The consumer makes his own choice.

I don't see FP forcing people into taking its cards.

And I don't see First Premier advertising itself as a best friend or a babysitter. FP lends money, at high rates and upfront fees, to people who cannot get it elswhere.

It's a free market out there. At least, it used to be.

Ah, this verbatim...

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 03:25:33 GMT

@Anonymous wrote:
The market is the market.

Tony Soprano lends money when nobody else is willing to do that...but he charges a hefty vig for his risk.

The consumer makes his own choice.

I don't see FP forcing people into taking its cards.

And I don't see First Premier advertising itself as a best friend or a babysitter. FP lends money, at high rates and upfront fees, to people who cannot get it elswhere.

It's a free market out there. At least, it used to be.

Yup, this will sure be interesting.

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 05:52:50 GMT

You need credit to get credit so how you get credit with no credit.? Surrendering to this predators. I think the fed should force to get rid of this credit score scam this is a tool to rob people I believe credit score is the biggest scam ever

Re: First Premier is suing the feds

trumpet-205 — Sat, 23 Jul 2011 05:57:14 GMT

You don't have to use FP.

You could start with secured credit card. Capital One offers nice secured credit card. Public Savings Bank even offers secured credit card without credit check.

Re: First Premier is suing the feds

scottwagnon — Sat, 23 Jul 2011 08:44:48 GMT

@trumpet-205 wrote:
You don't have to use FP.

You could start with secured credit card. Capital One offers nice secured credit card. Public Savings Bank even offers secured credit card without credit check.

FINALLY! yes! Someone that agrees that public secured is the best way to start.

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 17:20:46 GMT

@trumpet-205 wrote:
Given how FP charges outrageous APR (59.9 to 79.9%), I failed to see how they need anymore money.

No one should be carrying a balance on a $300 CL card anyway.

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 17:29:11 GMT

@Anonymous wrote:
You need credit to get credit so how you get credit with no credit.? Surrendering to this predators. I think the fed should force to get rid of this credit score scam this is a tool to rob people I believe credit score is the biggest scam ever

I believe anyone with "no credit," a real Social Security Number and some type of documentable cashflow (job, annutity, Social Security, pension, etc.) can get a CC on much better terms than FP.

FP (and others) makes their money off of people with "bad credit". We're talking about sub-500 Ficos, recent BK, etc. Some of these people can't even get secured cards because the banks (and CUs for that matter) want nothing to do with them.

If I had to start all over with my choice of "no credit" or "bad credit," I'd take "no credit."

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 17:31:43 GMT

@LynetteM wrote:
First Premier is located in my vicinity, and this is an article that was in today's local paper. They are suing due to the new restriction on upfront fees they are able to charge.

http://www.argusleader.com/article/20110722/NEWS/107220316/1001/rss01

I don't know where you draw the line between doing business with a high-risk demographic vs predatory practices.

If First Premier is successful in this suit we may see companies go back to the pre-Credit Card Act time of doing business. I think most of the changes were good ones. (PS...I didn't know where to post this but thought it might be of interest to those here on the Credit Card board.)

ETA: The public's comments at the end of the article are quite colorful.

"He said more than 120,000 people applied for the program last month."

Wow! 1.44 million applications per year.

Re: First Premier is suing the feds

lakerfan2011 — Sat, 23 Jul 2011 23:07:28 GMT

i do credit report repair for a living and its amazing how many people have charge offs on fp cards

Re: First Premier is suing the feds

Anonymous — Sat, 23 Jul 2011 23:59:33 GMT

@lakerfan2011 wrote:
i do credit report repair for a living and its amazing how many people have charge offs on fp cards

I'm not surprised, if you read the rebuilding forum someone is always trying to figure out how to GW FP. I wonder how many of these people are basicly COing the app/card fees.

Re: First Premier is suing the feds

Anonymous — Sun, 24 Jul 2011 00:08:17 GMT

@Anonymous wrote:
@lakerfan2011 wrote:
i do credit report repair for a living and its amazing how many people have charge offs on fp cards
I'm not surprised, if you read the rebuilding forum someone is always trying to figure out how to GW FP. I wonder how many of these people are basicly COing the app/card fees.

Then no wonder they charge an arm & a leg. Maybe they have cause to.

Re: First Premier is suing the feds

Anonymous — Sun, 24 Jul 2011 00:34:05 GMT

Those defending First Premier are missing one thing. In this case First Premier doesn't have a leg to stand on.

The CEO's argument, in summary, is this:

"We have to charge because it's a risky business".

Problem is, there are better ways to achieve the same stated objective. But you can't have your cake AND eat it. This is the boilerplate definition of predatory.

If you take a $300 credit card and "charge" half of it before the user even gets the card, that means you're collecting interest on money that the user never used. You're collecting interest on money that hasn't been borrowed. If ever there was a way to cook the books, this is it. Nevermind the practical issues: You tell someone they have a $300 credit limit but they can't use all of it until they pay back money that they never took in the first place.

Revolving credit means you are letting someone use money and then billing them for its use. That's not what First Premier does. That's why it's a problem.

Now, the way they mitigate risk is to do the following (assuming mitigating risk is their primary focus):

Issue the TRUE credit limit. SO if you really mean to issue $150 then do that.
If you want to charge obscene fees then do so WITHOUT affecting the credit limit given, and require that they be paid within a period of time or the card will be closed.
Charge a higher monthly fee. So charge $20/month. Then you recoup your fees while still giving the borrower the same limit they got approved for.
Offer only secured cards.

There are ways around it. They just want to be predators.

Re: First Premier is suing the feds

Anonymous — Sun, 24 Jul 2011 01:31:49 GMT

@Anonymous wrote:

Those defending First Premier are missing one thing. In this case First Premier doesn't have a leg to stand on.

The CEO's argument, in summary, is this:

"We have to charge because it's a risky business".

Problem is, there are better ways to achieve the same stated objective. But you can't have your cake AND eat it. This is the boilerplate definition of predatory.

If you take a $300 credit card and "charge" half of it before the user even gets the card, that means you're collecting interest on money that the user never used. You're collecting interest on money that hasn't been borrowed. If ever there was a way to cook the books, this is it. Nevermind the practical issues: You tell someone they have a $300 credit limit but they can't use all of it until they pay back money that they never took in the first place.

Revolving credit means you are letting someone use money and then billing them for its use. That's not what First Premier does. That's why it's a problem.

Now, the way they mitigate risk is to do the following (assuming mitigating risk is their primary focus):
Issue the TRUE credit limit. SO if you really mean to issue $150 then do that.
If you want to charge obscene fees then do so WITHOUT affecting the credit limit given, and require that they be paid within a period of time or the card will be closed.
Charge a higher monthly fee. So charge $20/month. Then you recoup your fees while still giving the borrower the same limit they got approved for.
Offer only secured cards.

There are ways around it. They just want to be predators.

I cannot think of any card issuer with an annual fee card that does not charge the AF to your card and, if you do not pay it off in full before the subsequent payment due date, charge interest on it.

Issue the TRUE credit limit. SO if you really mean to issue $150 then do that.

So that means instead of taking a bath on a card with a $300 limit & $150 available for use you take one on a card with a $150 limit and $150 available for use. Math problem here. Same loss.

If you want to charge obscene fees then do so WITHOUT affecting the credit limit given, and require that they be paid within a period of time or the card will be closed.

Name card issuers that do not charge AFs and other fees to the card. Not doing so means you have an uncollectable debt unless you get a separate, signed promissory note for a personal loan. So now FP needs two separate grants of credit w/ 2 separate tradelines for each cc?

Charge a higher monthly fee. So charge $20/month. Then you recoup your fees while still giving the borrower the same limit they got approved for.

How does that help if the cardholder defaults after one month?

Offer only secured cards.

Secured cards are also dangerous in the hands of some -- if not many -- of FP's customers. It's a myth that secured cards pose no risk for the issuer.