State Suing 7 Credit Card Companies Over "Fraudulent" Payment Protection Plans

Hawaii’s attorney general has filed a lawsuit against seven of the largest credit card companies in the U.S., claiming that they are wrongfully charging customers for payment protection plans without their consent.

It is estimated that more than 30,000 Hawaii residents pay a monthly fee intended to ensure their credit card company will either cover or delay their payments in case of job loss, injury, or some other inability to work.

Bank of America, Capital One, Barclays, Discover, Citi, and HSBA have a history of deceptive and unethical trade practices, according to the Hawaii Attorney General.

The companies are accused of using telemarketers to trick customers into signing up for payment protection in a practice called “slamming.” Because these charges were so small, often only one percent of a consumer’s credit card bill, they often went unchecked and unnoticed.

Furthermore, payment protection plans don’t apply to people who work part-time, are employed by members of their family, the unemployed, or retirees. According to Honolulu attorney Rick Fried, these banks have been preying on people who are most concerned about their financial status and who are most likely to sign up. And, companies allegedly even keep collecting money from customers who are ineligible for coverage.

The state of Hawaii has said that companies are liable for millions of dollars in penalties. If successful, those funds will end up in the state’s general fund and in the pockets of consumers who were tricked out of their money.

If you are a Hawaii resident who believes you have been tricked by your credit card company into signing up for a protection plan, you can call your Attorney General’s office at (808) 586-1500.

The state of Hawaii is being co-represented by Rick Fried’s firm as well as Golomb Legalof Philadelphia and Baron and Budd of Dallas. All firms are working on a contingency fee basis and will be paid depending on how much money is obtained from the credit card companies in question.