Cross Country Bank and its Pennsylvania-based collection company will pay restitution to consumers with impaired credit who complained of illegal sales tactics related to the marketing of the bank's pre-approved credit cards.

Pennsylvania Attorney General Jerry Pappert said the defendants must also issue refunds or credits to other qualified consumers who come forward before January 7, 2005. Along with restitution, the defendants are also required to pay a total of $450,000 in fines and costs.

Pappert encouraged consumers who suspect they are entitled to restitution to contact his Bureau of Consumer Protection at 1-800-441-2555 to obtain a complaint form. Complaint forms can also be filed electronically by visiting the Attorney General's website at

Pappert said a consent petition was filed in Commonwealth Court, resolving a June 2004 lawsuit that was brought by his Bureau of Consumer Protection against Cross Country Bank Inc. of Wilmington, Delaware, and Applied Card Systems Inc. of Glen Mills, Pennsylvania.

The lawsuit accused the defendants of violating Pennsylvania's Consumer Protection Law and Fair Credit Extension Uniformity Act.

According to the lawsuit, the defendants promoted and marketed pre-approved credit cards and services to consumers with impaired credit or no credit history. The ads claimed that the credit cards carried thousands of dollars in credit.

In reality, the credit limit was much lower than promised and the credit cards were issued with application, maintenance, membership, overdue, over-the-limit, customer assistance and other fees that were inadequately explained and often times automatically deducted from the starting credit card balance.

For many, once the fees were taken out, the cards had less than $400 in available credit. Some said the extra expenses actually pushed them further into debt instead of improving their credit standing.

Pappert said those who defaulted on their accounts complained that they were subjected to abusive and illegal debt collection practices including improper legal and physical threats to coerce payments.

Others said they were exposed to multiple harassing calls to their home or workplace that included obscene, derogatory, rude and hostile language directed toward them or family members, including children.

Under the terms of the consent decree, the defendants are required to:

• Pay restitution to consumers who filed complaints about inadequately disclosed fees and charges that were deducted from their accounts after December 31, 2001. Pay restitution to those who file complaints by January 7, 2005 with proof of similar harm.
• Take steps to remove any negative entries on consumers' credit reports.
• Pay $250,000 in civil penalties.
• Cease making false, deceptive or misleading representations regarding the identity of collection employees.
• Cease making false, deceptive or misleading representations regarding its legal authority to collect on consumers' accounts.
• Cease making false, deceptive or misleading representations that consumers have consented to withdrawing funds from their bank accounts to make payments on credit cards.
• Cease providing false or deceptive quotes to consumers requesting the amount payable to bring an account current and avoid late fees.
• Cease making numerous calls on a single day to consumers in an attempt to collect on accounts.
• Cease using tactics or language considered harassing, abusive, profane and annoying.
• Cease the use of false, deceptive or misleading language in written advertisements, promotions or communications with consumers.
• Clearly and conspicuously disclose any fees, terms and conditions associated with the credit cards or services.
• Fully comply with applicable state and federal laws.
• Provide the Commonwealth with records of complaints made by consumers.
• Pay $50,000 for the Commonwealth's investigation costs and $150,000 for future public protection purposes.