Colin Barr

Following the money in banking, economics, and Washington

World's foremost credit card ripoff: update

March 8, 2011: 1:01 PM ET

Maybe the World's Foremost Bank isn't all it's cracked up to be.

You might well draw that conclusion after reading the deceptive-practices settlement the Sidney, Neb., credit card bank signed with the Federal Deposit Insurance Corp. The bank, which sells Cabelas Club reward credit cards to customers of hunting-fishing retailer Cabelas (CAB), will repay wronged cardholders $10 million and fork over a $250,000 penalty, the FDIC said Tuesday.

Cabelas said in its latest annual report that almost a third of its customers have the cards, which it views as "an effective vehicle for strengthening our relationships with our customers, enhancing our brand name, and increasing our merchandise revenue."

Not so rewarding?

World's Foremost agreed, naturally without admitting to or denying the FDIC's findings, to do the following:

Refrain from the Bank's prior practice of contacting a cardholder at the cardholder's place of employment for purposes of collecting a debt after a verbal or written request is made by either the cardholder or the cardholder's employer to cease such contact because the cardholder's employer prohibits such communications.

Not to mention this:

Refrain from the Bank's prior practice of assessing a penalty interest rate on balances that existed prior to the event that caused the penalty interest rate to be imposed.

And don't forget:

Refrain from the Bank's prior practice of assessing late fees when periodic payments are due on Sundays or holidays and the payment is posted the following business day.

None of those sound like practices that you'd expect to associate with an outfit billing itself, presumably with good reason, as the World's Foremost Bank. A representative didn't immediately provide the World's Foremost comment.

But then, the past few years have brought us face to face with the hard truth that some banks aren't really all that well named.

Since 2008, more than a dozen Security banks have failed, along with three Integrity banks and one Sunshine bank. The only one of the 345 bank failures since 2008 to have been named appropriately failed two years ago next month: Cape Fear.

Also on Fortune.com:

Join the Conversation
About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

Email Colin
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.