ST. PAUL, Minn. (AP) -- A Delaware-based bank and its affiliate violated Minnesota consumer and privacy laws by making abusive, harassing and profane phone calls to collect credit card debts, Attorney General Mike Hatch alleged in a lawsuit filed Thursday.
Cross Country Bank Inc., and affiliate Applied Card Systems Inc., broke state law by calling people as often as 60 times per week and by using false pretenses to get customers to take calls, according to the lawsuit filed in Hennepin County District Court.
"This company is a predator," said Lori Swanson, state solicitor general. "It needs to be shamed just like it is trying to shame its customers."
Cross Country officials said in a written statement that they hadn't seen the complaint, but they were surprised that Hatch had taken "such a precipitous action."
"Independently, we are in the process of researching complaints received from Minnesota customers," the statement said.Swanson said her office has received more than 200 complaints about the company, which offers credit cards with very low balance limits to people with poor credit histories.
"They're legalized loan sharking," said Carol Engelstad, a credit counselor with Minnesota Credit Association in Farmington. She said the company lures people to take out cards with promises they can improve their credit, but then charges such high application fees, annual fees and interest rates that many customers immediately fall into debt.
She said she has worked unsuccessfully to negotiate payment plans with the company on behalf of her clients. "They always have another trick up their sleeve as to why they're going to keep charging the exorbitant fees."
Several other people who Swanson presented at a news conference described being harassed by phone calls for having a similar name to a card holder, for example, or to pay debts owed by a boyfriend or relative.
The lawsuit alleges debt collectors from Applied Card Systems were often abusive and used profane language, in one instance telling a customer "I'm more important than your (expletive) child."
Swanson said the state is seeking an injunction to stop the calls, civil penalties of as high as $25,000 per violation and restitution to customers.
A similar lawsuit was being filed against the companies Thursday by New York Attorney General Elliot Spitzer. Last year, the Federal Deposit Insurance Corporation issued a cease and desist order against Cross Country for a finding that the company had engaged in unsafe and unsound practices in its lending practices.
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