First Premier Bank, a Sioux Falls, S.D., unit of United National Corp., agreed Wednesday to refund $4.5 million to customers and pay $105,000 of penalties to the New York State Attorney General's Office to settle allegations that it used illegal and deceptive practices to market subprime credit cards.
According to Attorney General Andrew Cuomo, the bank told consumers they were eligible for a credit line as high as $2,000 at a fixed annual percentage rate of 9.9% without processing fees. Most consumers received a line as low as $250 with an interest rate that could double without notice, Mr. Cuomo's office said, and First Premier assessed a $178 "processing fee" and other hidden fees.
First Premier has discontinued the marketing practices, his office said.
The agreement prohibits the bank from charging consumers fees until they activate or use their card.
