$5 million: that's the price tag on a lawsuit filed by a South Dakota credit card company, First PREMIER/PREMIER Bankcard against a credit card comparison website. First PREMIER says CardHub violated an agreement after it stopped marketing the bank's cards. CardHub says the credit card issuer wants to keep its often-criticized high fees and interest rates secret from you, the consumer.
The credit card comparison website CardHub.com will let you type in your credit standing and what you're looking for in a card and will bring up a list of them to check out. The website also gets money from credit card companies to market their cards on the site. It used to have an agreement with First PREMIER Bank/PREMIER Bankcard to market its subprime cards. When that agreement ended, CardHub was supposed to take down the "apply now" link. But PREMIER says it kept on reappearing.
"What this lawsuit is all about is trying to make sure we are not confusing consumers and specifically speaking to links that CardHub would put out on their website saying "apply now" or "apply here," which I believe any reasonable consumer is going to believe they have an affiliation with us," Darrin Graham of PREMIER Bankcard said.
PREMIER says it would be held responsible by Federal Regulators if CardHub got any information about its credit cards wrong and it can't take that risk.
"CardHub links to the apply now links for every credit card company in the country, not just First PREMIER, so it doesn't many any sense to say that link constitutes endorsement," CardHub Attorney Deepak Gupta said.
Although when we compared some cards, we found other cards did not have the "apply now" link. But CardHub says the lawsuit isn't really about that.
"What you have here is a company that doesn't want the free marketplace of ideas to let people know about its products," Gupta said.
"We are definitely not trying to hide them. We want people to know what they're signing up for," Graham said.
PREMIER has come under a lot of criticism for its high fees: $170 in the first year and its 36 percent interest rate on its subprime card. But PREMIER says its 2.7 million cardholders know what they're signing up for.
"A consumer could not apply for our card without going through any of the fees or pricing that comes along with it. You just couldn't do it," Graham said.
And that's because it's also the law. CardHub calls the lawsuit a First Amendment right test case and has filed a motion to have it dismissed. PREMIER tells KELOLAND News it will proceed with the suit.