CA, San Fran - Providian (credit cards) blames glitch for $millions in late fee overpayments; DA's office claims fraudgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Providian Settlement Talks Ongoing - Rpt Updated 3:30 PM ET March 9, 2000
SAN FRANCISCO (Reuters) - The San Francisco district attorney's office and federal banking regulators are seeking a joint settlement of consumer fraud allegations against Providian Financial Corp.(PVN.N), boosting pressure on the credit card giant to resolve the case, the San Francisco Chronicle reported on Thursday.
Representatives of the D.A.'s office and the office of the Comptroller of the Currency met with Providian officials Monday to determine whether three-way talks were warranted, the Chronicle said.
Representatives of the two offices were not immediately available for comment.
Providian's stock fell about 30 percent last May after the San Francisco District Attorney's office announced it was investigating the banking company for unfair and deceptive business practices, following hundreds of consumer complaints.
On Thursday, Providian stock was trading up 7-1/2 at 68-1/2 a share at midday in New York Stock Exchange trading. That's down from a 52-week high of 136-3/16.
Lawyers for Providian customers have filed more than a dozen suits against the company, many of which criticized the company's alleged policy of charging late fees on payments that arrived on time. Other charges include charging consumers for credit insurance and other products they had not ordered, and providing deceptive information about interest rates.
Providian moved to address some of the complaints in July when it set aside $20 million to cover refunds after blaming a computer glitch for levying millions of dollars in improper late-payment charges.
Providian spokeswoman Laurie Cole said on Thursday the company is prohibited by law from commenting on discussions with bank regulators such as the comptroller's office.
But she did say discussions with the D.A.'s office were continuing and the company wanted to resolve the issue soon.
"Our goal from the outset has been to seek a broad resolution that's in the best interest of our customers, our shareholders and our employees. We're working diligently toward that goal," Cole told Reuters.
While Providian also faces investigation by the Connecticut district attorney and several consumer lawsuits seeking class-action status, financial analysts say the San Francisco and federal investigations are the most serious threat to the company.
By joining forces, the two have boosted pressure on Providian, offering the possibility of simultaneously resolving both cases but also threatening the bank with coordinated attack should the settlement talks fail, the Chronicle said.
If talks are fruitless, Providian could face everything from civil and even criminal charges to obligatory changes in company policy, court-ordered customer reimbursements and fines and personnel changes.
-- Lee Maloney (email@example.com), March 09, 2000