Credit Card Company Trapped People in High-Fee Cards, CFPB Says

A Pennsylvania-based credit card company collected more than $51 million in fees over five years by trapping consumers in high-cost membership programs that were unduly difficult to cancel, the Consumer Financial Protection Bureau said.

Reliant Holdings Inc., doing business as Horizon Card Services, and its founder and CEO Robert Kane charged customers a $300 annual membership fee to access a card with a credit limit of either $500 or $750 in the first year of membership, the CFPB said in a complaint filed Friday in the US District Court for the Western District of Pennsylvania.

The cards could be used only at Horizon Outlet, an online retailer owned by Reliant Holdings that sold off-brand toys, home goods, pet supplies, and clothing. When name-brand products were available, they were offered at prices higher than other online retailers, the complaint said.

A photograph of Horizon Outlet included in the complaint showed that it was “little more than a storage room.”

Customers who moved to cancel were dragged through a long series of phone calls with numerous membership offers and other sales pitches, the CFPB said. Reliant provided full refunds only if customers made repeated complaints or threatened to report the company to the Better Business Bureau, the agency 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 a statement.

Rich McDonald, a Reliant executive vice president, declined to comment.

Unused Cards

Kane founded Indiana, Pa.-based Reliant in 2005.

The company offers credit lines targeting vulnerable and subprime borrowers under names such as Boost Platinum Card, Freedom Gold Card, and Group One Platinum Card.

Reliant, operating as Horizon, enrolled nearly 900,000 customers into its membership program from 2017 to 2021, netting around $51 million in fees, the CFPB said.

But 93% of people who signed up for a Horizon credit line never used it, and those customers accounted for $45 million of Reliant’s membership fee revenue, the CFPB said.

Only 6% of Horizon members used their cards at the Horizon Outlet, the CFPB said.

Reliant, through Horizon, violated the Consumer Financial Protection Act’s prohibition against deceptive and abusive practices as well as the Truth in Lending Act, the complaint said.

The agency is seeking customer redress and a civil money penalty.

The case is CFPB v. Reliant Holdings Inc., W.D. Pa., No. 2:24-cv-01301, Complaint 9/13/24.