State Sues Local Credit Card Firm Lawsuit Alleges Eagle Card Misrepresented Benefits Of Holding Company’s Cards

Washington authorities have filed suit against Eagle Card Inc., alleging the Spokane credit card company violated consumer protection and telephone solicitation laws.

Eagle, according to the complaint filed Monday in Superior Court, misrepresented the benefits of holding the company’s three cards: the Credit Builder, Gold and Classic.

The company issued a letter Tuesday saying some sales practices would be suspended or modified until the state’s concerns are resolved.

The letter, signed by President C.E. “Ed” Franklin and Chief Financial Officer Steve Branton, says sales of the Gold and Classic cards have been suspended. Language in promotional materials describing a cash-advance policy will be modified, as will the company’s refund policy.

“We want to make sure we’re in compliance,” Franklin said in an interview.

Assistant Attorney General Paula Selis said officials have received more than 80 complaints from all over the United States about the cards, which were marketed over the telephone and through the mail.

Most of the customers were upset because they did not realize until they had paid for the cards that very few, if any, merchants in their area would accept the card, Selis said.

A list of businesses that take the Eagle card is inaccurate, she said.

“It’s a pretty worthless item,” she said of the cards. “It’s like buying a car and finding out you don’t have a steering wheel.”

There have been no complaints from merchants that they did not receive payment from Eagle when the cards were used, Selis said.

The cards cost $40 to $60 and carry different interest rates and annual fees. The Credit Builder allows purchases only from the company’s own catalogs, which cost a total of $14.50.

Consumers must pay for the catalogs, and Credit Builder cardholders must put up a down payment of one-third the purchase price of any item they order.

Selis said items ordered from the company’s catalog were delivered but usually only after extensive delays. Few cardholders shop the catalog because prices are not advantageous, she said.

The cash-advance program is available only after $500 worth of items have been ordered from the catalogs, and “instant credit limits” of $1,000 also are restricted to catalog orders.

If consumers try to get refunds once they discover the card’s shortcomings, an “application fee” of $23 or $25 is withheld, Selis said, adding that some who order the cards never receive them.

She said Eagle, which employs 50 in Spokane, is not licensed as a commercial telephone solicitor in Washington.

Franklin said the number of complaints is small relative to the number of cardholders - 30,000 - signed up by the company. And regulators in other states have taken no enforcement action when given the company’s sales materials, he said.

Eagle officials hope to resolve their problems in Washington in face-to-face meetings with state representatives, Franklin said.

“We are honest and forthright,” he said.

Although only 200 merchants honor the Eagle card nationwide, Franklin said, the card’s major objective is to build credit for new cardholders or restore the credit of those who have abused their plastic in the past.

, DataTimes MEMO: This sidebar appeared with the story: EAGLE CARDS Eagle Card Inc. markets cards to help users build credit. Here’s a look at its three cards: Credit Builder - Good only on merchandise in company catalogs, costs $48, charges 12 percent annual rate on balances. Classic - Costs $50, $25 annual fee, 12 percent APR, $4,000 credit limit. Gold - Costs $60, $35 annual fee, 10 percent APR, $10,000 credit limit.