AG warns against deceiving credit cards

This gold may not even pass for a bronze.
Two years after its resurgence in the Northern Marianas met by the Commonwealth government’s prompt effort to curtail its spread, a United States-based company is once again trying to dupe CNMI consumers through notices that they have been pre-approved for a card with a tempting credit limit.

The Consumer Counsel of the Attorney General’s Office during the weekend warned that Dallas, Texas-based Credicorp Inc. is again sending tempting offers for worthless, pre-approved gold cards to CNMI consumers.

The government has been receiving inquiries from Northern Marianas residents on the legitimacy of the offer. In 1998, the banking division of the Department of Commerce reported the presence of such mails that had already reached local consumers.

According to Consumer Counsel David Lochabay, Credicorp Inc., a Dallas, Texas-based company, has been encouraging consumers to get a pre-approved application for a “gold card”, for $29.95.

The pre-approved “gold card” reportedly has $10,000 credit limit, and would be handed over after applicants pay the $29.95 membership fee.

Mr. Lochabay said, however, the offer is deceitful since it indirectly makes it appear that the pre-approved card is either a Master or a Visa card, or other widely accepted credit cards.

He stressed Credicorp’s credit card actually offers too little value to the average consumer since it can only be used to purchase items out of the issuer’s shopping catalog.

“This merchandise is typically overpriced and consumers have to make a substantial down payment, as high as 40 percent to 50 percent, before they can charge the balance to their [alleged] gold card,” Mr. Lochabay said.

Prompted by inquiries from interested CNMI residents who had received the offer through mails and inquired to the commerce department, the Banking Division initiated investigation through the Internet in 1998.

Cyberspace investigations indicated that two leading business institutions in the US – Council for Better Business Bureaus and Card Trak of America – have also issued warnings against Credicorp’s gold card offer.

The Council has warned that the gold card could not be used as a general purpose credit card like MasterCard and Visa, as it is for exclusive use in ordering items from Credicorp’s catalog.

In fact, Credicorp’s mailer said that the $10,000 credit limit is “valid exclusively toward Credicorp purchases.” Full details are also made available only after consumer remits the $29.95 annual fee.

Card Trak, at the same time, said companies that offer so-called gold cards really offer a catalog shopping card, where items are generally “excessively overpriced.” “If an offer sounds too good to be true, it probably is (bad),” the commerce department said.

Mr. Lochabay said these gold cards are normally offered to consumers with prior credit problems who may be trying to rebuild their credit. These consumers are often disappointed as most of these gold card issuers do not report payment records to credit bureaus.

“As they prey on this vulnerable category of consumer, it is not in their interests to see these consumers establish good credit, which would then qualify them for regular credit cards,” he added.

Some companies also offer good credit card deals to persons who pay a fee but what the consumer actually receives is merely a list of credit card issuers. Consumers would still have to meet all requirements set by credit card issuers before they could qualify for it.