First Premier Bank, notorious for its high-cost credit cards, is suing a credit card comparison site and the site's owner, because the site refuses to take down data on the rates and fees charged on First Premier credit cards. Saying that publication of this data constitutes trademark infringement, First Premier sued CardHub and its owner Odysseas Papadimitriou for $5 million in April.
In a recent legal response, Papadimitriou and CardHub contend that First Premier's suit is aimed at silencing critics and making it harder for consumers to comparison shop. Saying the suit is about First Amendment rights, not trademarks, CardHub's legal response reads, "if suits like First Premier's are allowed to proceed, any company dissatisfied with a bad review of its products or services -- whether in a website, or in a printed newspaper or magazine -- would be able to bring an infringement action to halt publication of the unwanted review."
"This lawsuit is a transparent attempt to keep consumers in the dark, and it raises troubling First Amendment issues," said Deepak Gupta, the attorney representing CardHub in a prepared statement. "The trademark laws are about ensuring fair competition; they don't entitle companies to censor critical commentary online."
First Premier Chief Executive Miles Beacom failed to return a reporter's phone calls. However, the company has said in previous statements to the media that it needs to "retain control" of its product.
CardHub notes that data about the rates and fees charged by First Premier, named "worst credit card in America" by Consumer Reports in 2010, do not appear in graphic credit card comparisons on any other site, causing Papadimitriou to speculate in legal filings that his site is not the only one being intimidated by First Premier. Ted Rossman, a spokesman for CreditCards.com, acknowledged that his site removed the data at First Premier's request. Bill Hardekopf, CEO of LowCards.com says his site doesn't list First Premier because the company does not provide automated updates of rates and fees.
However, some personal finance sites -- including Consumer Reports, NerdWallet, and CreditCard Forum have commentaries that warn about First Premier's high rates and fees.
In a story titled "Please Don't Get a First Premier Credit Card," a NerdWallet post explains that to get a card that theoretically offers a $300 credit limit, the company will load its $75 first year annual fee on the card, leaving the consumer with just $225 in available credit and subjecting him to double-digit interest charges before ever using the card. Worse, to get the card at all, consumers must pay a $95 application fee. The minimum first-year cost -- before interest charges -- is a whopping $170.
The cards are issued to people with bad credit credit, who often have to put up security deposits and pay higher-than-average fees until their credit recovers. Yet, even in the subprime credit card market, First Premier's cards offer deals that are as bad as deals get, says Chi Chi Wu, staff attorney at the National Consumer Law Center.
"First Premier is a very aggressive issuer that charges some of the highest fees out there," says Wu. "Warn your readers: Don't get this card."
Indeed, consumers with bad credit can do far better with other cards, as CardHub's lonely comparison clearly shows. Those needing to find a card to rebuild their credit can use CardHub's credit card comparison tool, which shows that Capital One, Credit One and First Progress all offer secured cards with far more favorable terms.