CFPB Drops ‘Gouging’ Case Against Horizon Card Services

The CFPB has dropped its case against Pennsylvania-based company Horizon Card Services.

The Consumer Financial Protection Bureau (CFPB) sued Horizon and parent company Reliant Holdings last year, alleging that the company had employed deceptive marketing, charged illegal and excessive fees, and made it unreasonably tough for consumers to cancel memberships and get refunds.

Now, the regulator says it will no longer pursue that case against Reliant and founder and CEO Robert Kane, Bloomberg News reported.

“Today’s decision by the CFPB to voluntarily dismiss this case with prejudice serves as proof that they find their own case to be completely meritless,” Reliant said in a statement, per Bloomberg.

The report noted that the decision marks at least a dozen actions launched by former CFPB Director Rohit Chopra that President Donald Trump’s administration has chosen to drop.

As covered here last year, the CFPB’s suit accused Horizon of offering credit cards with annual fees of about $300 with a credit limit of $500 and which could only be used to buy goods at what the regulator described as the company’s “overpriced” online store. 

The regulator also alleged that customers were required to pay “membership fees” of up to $24.99 a month, or about $300 a year.

“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,” Chopra said at the time.

The dismissal follows news from earlier this month that the CFPB would scale back its enforcement of financial services companies as it shifts its focus away from things such as student loans, medical debt and digital payments.

“The bureau will focus its enforcement and supervision resources on pressing threats to consumers, particularly service members and their families and veterans,” Mark Paoletta, the bureau’s chief legal officer, wrote in a memo seen by Reuters.

The White House also hopes to lay off 90% of the CFPB’s staff, though that move has been on hold since earlier this month, blocked by a federal judge who wants more time to determine whether this plan violates an earlier order.

In that ruling, Judge Amy Berman Jackson said the CFPB could not conduct a reduction-in-force (RIF) until it performed a “particularized assessment” showing that workers who are laid off are not necessary for the agency to carry out its statutory duties.

A follow-up hearing on the matter is scheduled for Monday (April 28).

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