Providian Financial Corporation was one of the leading credit card issuers in the United States when it was sold to Washington Mutual approximately US $ 6.5 billion in October 2005. Providian is headquartered in San Francisco, California, and has more than 10 million cardholders at the time of sale. Washington Mutual, Inc., continues to run the company as a wholly owned subsidiary, from its headquarters in San Francisco. At its peak, the company employs about 13,000 people nationwide. Providian has significant operations in California, New Hampshire, and Texas.
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History
In 1981, Parker Pen acquired two banks to start a credit card company under the name First Deposit, based in San Francisco. In 1984, First Deposit was sold to Kentucky Capital Holding, then renamed Providian. When the Providian insurance operations are acquired by Aegon, the Providian credit card business is separated as a separate company.
Providian is a company that sells credits in the "subprime" market. Providian provides credit cards primarily to the lowest income group in the US with high interest rates. The annual percentage rate (APR) charged by the Providian is as high as 29.9 percent.
In a March 1999 memorandum published by the San Francisco Chronicle, the company founder Andrew Kahr asked the company's executives about its customers: "Is there little food that is too small to pick up when you" Are hungry and when nothing else is visible? The trick is charging a lot, over and over again, for small doses of instrumental credit. " Many critics argue that extended credit makes borrowers poorer than ever, extended credits have the opposite effect on corporate officers and directors, making them richer David Alvarez, the former president of the integrated card unit, generated a 12.2 million US dollars profit that sold his shares before the company revealed that he was in big trouble.Larry Thompson sold all of his shares worth approximately US $ 4.7 million after the trial confirmation and short time before Providian financial issues become public information and stock prices plummet.
Classroom action settings
Beginning in mid-1999, a number of class action lawsuits were filed against the company regarding aggressive sales tactics for various "credit protection" services sold to Providian credit card holders.
On November 7, 2001, Hon. Stuart R. Pollak of the California High Court, City and San Francisco County, gave final approval for a settlement agreement in this case, and certified the settlement class. The settlement required Providian to pay more than $ 100 million in cash, credits, and other benefits for the class, and to stop certain practices that are problematic in classroom action. Combined with a previous settlement with a government entity, this award is the largest ever settlement of a credit card company due to alleged wide business practices and unlawful practices.
Providian National Bank and its parent company, Providian Financial, are accused of deceiving and unfairly taxing their customers since June 1995. The case was initiated by the Office of the US Currency Oversight (OCC) and the San Francisco District Prosecutors Office. In 2000, Providian agreed to replace $ 300 million to 3 million customers, who became victims of misleading sales and charged for products they did not want, including Providian credit protection plans, balance transfers, annual fees, and other services. The settlement is the largest enforcement action ever undertaken by the OCC and is the first law enforcement action under the Federal Trade Commission Act by the bank's regulatory body.
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References
External links
- How Providian Misleading Cardholders , San Francisco Chronicle, May 5, 2002
- How Providian Misleading Cardholders , SFGate.com, May 5, 2002 Site
- Providian Surveillance Site - One Cardholder Nightmare , ProvidianFinancialSucks.com
- 12.2 million profit David Alvarez opens Nexxo Financial , nexxofinancial.com, November 29, 2010
- TECHNOLOGY; Providian Overcome Credit Cardsuit by Paying $ 105 Million
Source of the article : Wikipedia
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