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First USA Pays $1.3 Million to Settle Deceptive Practices Case

April 22, 2003
First USA Bank and its corporate parent, Bank One, are paying $1.3 million to settle a lawsuit filed by 28 states and Puerto Rico, charging that the banks permitted telemarketing firms to use deceptive practices to win business from bank customers.

Oklahoma Attorney General Drew Edmondson reached the settlement with the banks recently. The states alleged that the banks provided customer lists and encrypted credit card numbers to telemarketing firms who then kicked back a percentage of their sales to the banks.

"When a company sells its customers lists to telemarketers, it has an obligation to protect its consumers from deceptive solicitations," Edmondson said. "This agreement will hold First USA/Bank One responsible for the way telemarketers do business with its customers."

Edmondson said the bank had been receiving a percentage of the profits from sales to bank customers since the mid-1990s. The states pursued the case for three years after consumers complained that they were being charged for products and services they had not ordered.

A spokeswoman for the company said it had already implemented several changes beginning in 1999 when the issues were first raised.

The settlement provides that consumers can now opt out of letting the bank share their information with other parties. The settlement also requires First USA/Bank One to get authorization from an account holder before the account can be billed. The bank is also required to review and approve all telemarketing scripts and marketing materials.

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