Credit card company trapped vulnerable consumers in to signing up for high-fee membership cards with limited use, CFPB says

The Consumer Financial Protection Bureau sued Horizon Card Services and its CEO Robert Kane Friday for tricking consumers into signing up for its expensive membership credit card.

Horizon’s credit card, which could come with almost $300 in annual fees on a card with a $500 credit limit, could only be used to purchase goods from the company’s overpriced online store.

In addition to charging consumers illegal and excessive fees, Horizon also made it difficult for consumers to cancel memberships and obtain refunds.

The CFPB is asking the court to end Horizon and Kane’s illegal conduct and to order them to pay a fine and return money to consumers, Rohit Chopra, CFPB director, said in a statement.

Reliant Holdings, a nonbank corporation headquartered in Indiana, Pennsylvania, doing business as Horizon Card Services, offered consumers enrollment in a membership that included an unsecured, open-end line of credit. The line of credit usually started at $500 or $750.

The company marketed its credit line under numerous brand names including Boost Platinum Card, Freedom Gold Card, Group One Platinum Card, and Horizon Gold Card.

Founding the company in 2005, Robert Kane is the CEO and sole shareholder and oversees daily business operations.

The Horizon Card Services was targeted toward financially vulnerable, subprime consumers. Between 2017 and 2021, Horizon enrolled nearly 900,000 consumers in its membership program who paid more than $51 million in fees.

Ninety-three percent of those consumers never used any Horizon product, however, they paid more than $45 million in fees, according to the lawsuit.

Between 2017 and 2021, only 6 percent of consumers used their cards at the outlet.

From 2017 to 2021, Horizon required customers to pay up to $24.99 a month, or about $300 a year, in “membership fees” for the credit line.

These fees amounted to 60 percent of the $500 credit limit provided by Horizon for the first year of membership, which far exceeds the 25 percent cap set federal law.