The Consumer Financial Protection Bureau has filed a lawsuit against Horizon Card Services and its CEO, Robert Kane, for allegedly engaging in deceptive and abusive practices targeting financially vulnerable consumers. The CFPB claims that Horizon lured consumers into signing up for a costly membership program under the false pretense of offering a general-purpose credit card. In reality, the card could only be used to purchase goods from Horizon’s overpriced online store, Horizon Outlet.
Key details: Horizon marketed its membership as a credit card with a $500 to $750 credit limit, requiring no credit check. However, this line of credit could only be used at Horizon’s online store, which sold overpriced, off-brand goods. Despite being marketed as a credit card, it functioned more like a restricted membership.
- Between 2017 and 2021, Horizon enrolled nearly 900,000 consumers, most of whom never used the card but were still charged up to $300 annually in fees. These fees amounted to as much as 60% of the credit limit, far exceeding the 25% cap set by the Truth in Lending Act (TILA). The CFPB alleges these fees violated both TILA and the Consumer Financial Protection Act
- Consumers who attempted to cancel their membership faced an unnecessarily lengthy and frustrating process. Horizon’s representatives reportedly offered multiple rebuttals and discounts to dissuade consumers from canceling, and refunds were often only issued if customers threatened to escalate the issue with their bank or the Better Business Bureau.
What’s next: The CFPB is seeking a court order to end Horizon’s deceptive practices, impose a fine, and require the company to compensate affected consumers. The agency’s focus on fee-harvesting schemes and consumer abuse underscores its commitment to holding financial services accountable.
What they’re saying: Said CFPB Director Rohit Chopra, “The CFPB will continue to closely scrutinize illegal fee harvesting and price gouging, and hold individual financial executives accountable for their role in wrongdoing.”
