Below are edited excerpts from “Credit Card Issuer Will Repay Millions to Some Customers,” a June 29, 2000 New York Times article:

(Past articles are available at the Times archives.)

Providian agreed June 28, 2000 to a demand from bank regulators to reimburse its customers a minimum of $300 million for misleading and improperly billing them. In addition, Providian will pay a $5.5 million fine to the City of San Francisco.

Providian signed a joint agreement with the federal Comptroller of the Currency, the attorney general of California and the San Francisco district attorney’s office.

"Providian has engaged in a pattern of abusing consumers by misleading them," said Daniel P. Stipano, the director of the comptroller’s enforcement and compliance division.

As part of the agreement, Providian neither acknowledged nor denied breaking the law but did agree to halt the practices objected to by regulators. Providian’s chief executive is Shailesh Mehta, and its credit card operation is led by David R. Alvarez. Mehta told reporters in a conference call: "This was purely a business decision" based on the calculation that litigation would have cost more than the settlement.

Providian focuses its marketing on the growing number of Americans who have credit problems and is known for its sophisticated use of databases in singling out potential customers.

The regulators accused the Providian Financial Corporation, the nation’s sixth-largest issuer of credit cards, of deceiving hundreds of thousands of consumers, many of them with credit problems, with phone calls and mass mailings full of confusing sales pitches. As a result, people paid annual fees when they had been told there would be none, received credit cards they did not know they had signed up for and were subjected to higher interest rates than the company had advertised, according to the government, which conducted a yearlong investigation.

The bank, which is based in San Francisco, was the nation’s fastest-growing issuer of credit cards over the 12 months ended March 31, increasing the size of its portfolio -- which is chiefly credit card debt -- by 54 percent, according to Friedman Billings Ramsey, an investment banking firm in Arlington, Va.

In one pitch, Providian boasted of charging no annual fee but then required customers to pay $156 a year for credit protection, the government said. If, after seeing the charge, they asked not to receive the protection, they were charged an annual fee.

In another, Providian telemarketers, working from scripts, refused to tell people what interest rate they would receive no matter how many times they asked. Instead, the employees would repeat, using slightly varied language, the idea that Providian would significantly beat a consumer’s current interest rate. In reality, the difference was usually slight and, because of the complicated rules, often ended up being higher, Mr. Stipano said.

The case offers the latest evidence of a growing consumer backlash against credit card companies. So many consumers have complained about receiving their bills too close to the payment deadline to avoid a late fee, for example, that the comptroller began an investigation into the practice earlier this year. Bank One’s giant First USA credit card unit has received the most complaints.

Most of the current government efforts against this sort of fraud focus on confusing, high-interest home-equity loans that are pitched to people who often have few other lines of credit open to them and can lose their houses if they default. In 1994, Congress passed a law intended to curb deceptive loans by increasing disclosure by lenders, but regulators have since warned that the law has had little effect. The Federal Reserve recently formed a multiagency task force that is studying ways to curb predatory lending.