First Premier Bank, a credit card issuer that specializes in issuing credit cards for consumer with low credit scores or without credit scores, has sued to block regulations that it said would put it out of business.
The company filed suit in U.S. District Court for the South Dakota, Southern Division.
The company said its cards are the only chance many consumers have of getting a credit card and that its upfront fees of between $25 and $95 differ from those Congress tried to target in the CARD Act of 2009.
The case is somewhat unusual because the bank is challenging changes regulators made to Regulation Z that, the bank said, are precluded by the CARD Act.
“Congress's primary concern was protecting consumers from unwittingly agreeing to fees that would be charged to the credit account at the time of account opening, thereby reducing the amount of available credit consumers thought they were obtaining,” the bank wrote in its complaint. “Congress was not concerned with fees knowingly paid for the credit prior to account opening, which do not reduce the amount of credit available to the consumer.”
First Premier said it allows up to 85 days for a consumer to pay the upfront fee and that, in the case the consumer does not, the company refunds any payment that had already been made.