Credit One Bank Pays $10.2M Fine In Debt Collection Complaint Settlement

Credit One Bank has agreed to pay $10.2 million to settle a civil lawsuit alleging that Credit One made frequent and harassing phone calls to California phone numbers in an attempt to collect consumer debts.

According to the civil complaint, Credit One had a policy that allowed its vendors to make eight phone calls per day plus an extra two calls under specific circumstances to customers with past due credit card accounts. These calls could take place on consecutive days.

“Bombarding consumers with calls over debts is illegal,”  said Jeff Rosen, Santa Clara County District Attorney, in a press release. “Folks may owe money, but companies owe their consumers reasonable civility and consideration.”

A judgment in the civil case was entered on Feb. 19. As part of the settlement, Credit One was ordered to pay $9 million in civil penalties and $1.2 million in investigative costs.

The court ordered Credit One and its vendors to implement policies and procedures to prevent unreasonable and harassing debt collection calls to California consumers. This includes compliance with state and federal laws concerning consumer debt collection calls.

The California Debt Collection Task Force, a statewide team comprised of the district attorney’s offices in Santa Clara, San Diego, Los Angeles, and Riverside counties, investigated and prosecuted the case against Credit One.

“Credit card companies do not have the right to badger consumers and invade their privacy with non-stop phone calls to collect debt,” said Nathan J. Hochman, Los Angeles County District Attorney, in a press release.

“We are sending a strong message today that companies will not get away with harassing consumers in our state,” he said.

This is the fourth court-approved settlement announced by the Californian Debt Collection Task Force, following multimillion-dollar judgments reached against Capital One in 2022, Synchrony in 2021, and Allied in 2018.

Credit One, which specializes in subprime credit cards, did not admit to any wrongdoing in the current settlement and did not respond to our request for comment.

Credit One had previously been found liable by a federal jury in 2019 for violating California’s Rosenthal Fair Debt Collection Practices Act, according to a press release from the Los Angeles County District Attorney’s Office.

California’s Rosenthal Fair Debt Collection Practices Act dates back to 1977, according to American Banker.

Credit One is facing another lawsuit in California, this one filed by an Alameda woman claiming she received multiple collection calls each day, American Banker reports.

One thing credit card issuers should take away from the Credit One settlement is that they are responsible for the doings of the third-party debt collectors they hire. And because many credit card issuers rely on outside debt collection agencies, this is a big issue to consider.

As an issuer, there will be state debt collection laws to comply with as well as the Consumer Financial Protection Bureau at the federal level. With card issuers tightening underwriting and ramping up collections, maintaining proper debt collection practices is paramount.

Credit One, a subprime credit card specialist, has agreed to pay $10.2 million to settle a debt collection lawsuit in California. The suit alleges that Credit One made harassing and frequent phone calls to people in California when attempting to collect a consumer debt.

The Credit One case reveals that credit card issuers are responsible for the actions of the third-party debt collection agencies they hire.