CFPB Sues Horizon Card Services, Alleging ‘Baiting and Gouging’ Consumers

The Consumer Financial Protection Bureau (CFPB) sued Horizon Card Services and its CEO Robert Kane Friday (Sept. 13).

The CFPB alleged that the company used deceptive marketing, charged illegal and excessive fees, and made it unreasonably difficult for consumers to cancel memberships and obtain refunds, according to a Friday press release.

Horizon Card Services, doing business as Indiana, Pennsylvania-based nonbank corporation Reliant Holdings, offered credit cards that could come with annual fees of about $300 with a credit limit of $500 and could only be used to purchase goods at the company’s “overpriced” online store, the release said.

“The CFPB is suing Horizon and its CEO Robert Kane for gouging low-income Americans and making it nearly impossible to cancel for a full refund,” CFPB Director Rohit Chopra said in the release.

Reliant Holdings did not immediately reply to PYMNTS’ request for comment.

The CFPB alleged that the line of credit offered by Horizon was marketed as a regular credit card but could only be used to buy goods from an online store called Horizon Outlet; that the online store has a limited selection of overpriced or off-brand goods; that customers were required to pay “membership fees” of up to $24.99 a month, or about $300 a year; and that the company made it difficult for customers to cancel memberships and obtain full refunds, according to the release.

Among the nearly 900,000 consumers who enrolled in the membership between 2017 and 2021, 93% never used any Horizon product, despite paying a collective total of over $45 million in fees, the release said.

In its complaint, the CFPB is asking the court to end the illegal conduct of Horizon and Kane and order them to pay a fine and redress to consumers, per the release.

“The CFPB will continue to closely scrutinize illegal fee harvesting and price gouging, and hold individual financial executives accountable for their role in wrongdoing,” Chopra said in the release.

The regulator has long targeted what it calls “junk fees,” saying in April that such fees “impede fair and competitive pricing.”

Consumers often face complex terms and pricing when shopping for financial products and services like credit cards, the CFPB said at the time.