According to a report in Business Week,
The allegations, in part, focus on CompuCredit's Aspire Visa, a subprime credit card for risky borrowers. The FTC claims that CompuCredit didn't properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices.
"The company touted that cardholders could use their credit cards anywhere," says J. Reilly Dolan, assistant director for financial practices at the FTC. "What they didn't say was that you could be punished for specific kinds of purchases."
The algorithms for determining credit scores – and there are many different versions – are highly guarded. Your Credit Mama has outlined the basics of the FICO scoring model, which is based on things like debt utilization, on-time payments, etc. But it appears from this lawsuit that there are many undisclosed variables that can have a negative impact on your financial profile. If you've always suspected that purchasing behavior – not just payment history – influences your credit score, this case may prove you right.
The Federal Deposit Insurance Corp. is also seeking $200 million in penalties from CompuCredit in the matter.
