Sunday, February 15, 2004

Providian and Democratic Party team up for credit card program 

It is axiomatic that Americans carry a lot of debt. According to an MSN Money article called “How does your debt compare?” about 43 percent of American families spend more than they earn each year. Average households carry some $8,000 in credit card debt. And personal bankruptcies have doubled in the past decade.

So why is the Democratic Party, which claims to be the party for the middle class and the poor, trying to raise money through a credit card affinity program?

Providian (a.k.a. Providian National Bank and Providian Financial Corporation) has teamed up with the Democratic Party to offer a 16.99 percent VISA card with a 1 percent rebate on purchases. People who get this card are urged to donate that rebate to the Democratic National Committee via a check-off provision on the “preapproved reply form.”

Providian is a very aggressive marketer of high interest rate credit cards. This writer gets 4-6 Providian mail offers a month, which is how she discovered the political party affinity program. (Providian is apparently using a very old Democratic Party voter list. This writer has been a registered Green for three and a half years.)

The solicitation includes a form letter from DNC Chair Terry McAuliffe, touting the benefits of the card, including “excellent customer service.” Previous Providian cardholders might beg to differ. A Google search turned up many complaints about Providian. Here is one such assessment, by Richard Green, who is the St. Louis, MO, guide on, “The Bottom Line - Whether you have good credit or less than perfect credit think twice before opening a credit card account with Providian Bank, Providian National Bank, or Providian Financial. Don't be fooled by low introductory APRs or gimmicks. This company has a horrible reputation when it comes to customer service and many people think they go out of their way to find legal ways of raising customer APRs and charging additional fees to customer accounts.” Green titled this particular guide review as “Is Providian a Predatory Lender?

Providian was the target of a class action lawsuit filed by the San Francisco law firm of Lieff Cabraser Heimann and Bernstein as well as lawsuits by government entities. Although Providian disclaimed any wrongdoing, it settled the Lieff Cabraser suit, called “In re: Providian Credit Card Cases,” in November 2001, for more than $100 million dollars in cash, credits and other benefits. Although most members of the class received less than $20, Lieff Cabraser's website says that: “Combined with an earlier settlement with governmental entities, the award constitutes the largest settlement ever against a credit card company for alleged widespread consumer fraud.”

So why is the Democratic Party trying to raise money through Providian?

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