Credit card insiders tell of deceptive practices

By Pedro Nicolaci da Costa

NEW YORK (Reuters) - Two former employees of credit card issuer MBNA, now owned by Bank of America, said on Wednesday they were forced to use aggressive and deceptive practices with customers in order to boost revenues.

Cate Colombo, from Maine, said she signed up for a customer service job but was instead instructed to make insistent sales pitches aimed at getting MBNA customers deeper into debt.

"I was hired to sell money," she said on a conference call organized by Americans for Fairness in Lending, an advocacy group. "We had a goal of selling $25,000 an hour, $4 million per month. And I was one employee among hundreds, just at this one site."

To meet these goals, Colombo said she was told to turn every regular call from a customer into a sales call. She would do this by running the customer's name through the computer and finding out every possible line of credit they had ever obtained through MBNA.

She would then total the amount of credit outstanding and offer it to the customer as a blank check. MBNA was a bit lighter on disclosure details, such as telling customers that taking on more debt would reduce the borrower's credit score and thereby boost their outstanding interest rates.

"If we didn't attempt to max out, we were considered insubordinate," said Colombo.

In July, a U.S. House of Representatives committee passed legislation aimed at curbing credit card billing practices that surprise borrowers with unexpected interest rate increases.

It is unclear if credit card legislation will make it through Congress this year with the legislative session shortened by November elections.

Consumer indebtedness is a major problem in the United States, one that is becoming worse amid a financial crisis that threatens the economy with a recession. Americans had $969.9 million in outstanding credit card debt as of July, according to Federal Reserve data.

A spokeswoman for Bank of America said the bank does not seek to extend credit to customers who cannot pay.

"We don't comment on allegations of former employees, but I can tell you that the allegations cited do not reflect our practices," said Betty Riess, a spokesperson for Bank of America. "Bank of America has nothing to gain by extending credit to people who do not have the ability to pay us back."

"By the way, if you're talking about former MBNA employees, their employment would date back many years ago prior to the merger with Bank of America," Riess said.

Bank of America completed its purchase of MBNA in January 2006.

Colombo said in one instance she was disciplined for not being aggressive enough in "pushing product" to a 90-year-old man who could barely hear over the phone.

Jerry Young, another MBNA rep, said he was asked to intensely target customers in such a way as to leave them little choice but to stretch their finances, to the company's profit.