Consumer complaint received 2020-02-07
Company: PENTAGON FEDERAL CREDIT UNION
State: WV
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Fees or interest
Sub-issue: Problem with fees

Complaint:
Received an undated letter from PenFed stating PenFed had purchased my credit card account from XXXX XXXX and on XX/XX/20 PenFed would convert my XXXX XXXX to a Gold Visa Card Account and " There is no further action on my part. '' The letter did NOT provide any other information such as interest rates, can I opt out, what is the effect on me if I opt out of the PenFed Gold Card - literally no more information was provided! 

I called PenFed on XX/XX/20 at XXXX, was on hold until XXXX and the call terminated at XXXX. I spoke with XXXX and then her Supervisor XXXX. During the call, I was told I could opt out of the PenFed Gold card by XX/XX/20 ( just mere days from now ) and if I did so I could just pay off the remaining balance over time. I asked what the interest rate of the Gold Card would be and was advised they could not tell me UNTIL the Gold Card was ISSUED???? ( Interesting because I receive card offers with interest stated on the offer and yet PenFed - with whom I have had accounts for years - has my credit history, history of my numerous and paid off accounts and my financial standing and yet they CAN NOT determine an interest rate UNTIL AFTER the Gold Card was ISSUED!

So, I asked what is the interest rate if I just pay off the remaining balance. Would you believe the answer was : " We don't know what the interest rate will be? '' I do not have immediate access to my XXXX XXXX documents but I believe I have a " 0 '' percent interest rate on that account. QUESTION : Can PenFed raise the interest rate originally agreed upon by XXXX XXXX and myself if I opt out of the PenFed Gold Card and, if so, by what authority? 

XXXX agreed that it was not fair that I make a decision without all the pertinent information but he could not give me the information I am asking for. 

I requested that XXXX/PenFed protect and preserve the recorded phone call and requested a copy of the recording. XXXX advised me that PenFed does not release recordings upon requests and told me I would have to institute legal action or go to the police to get a copy of the recording. I am again requesting a copy of the phone call recording. 

I encourage all parties to obtain a copy of the recorded phone call and evaluate the recording because this complaint is based on my notes taken during the call and the recording will contain more details than I have provided in this synopsis. 

Additionally, I am deeply troubled that PenFed can just buy an account, advise one that they will issue a NEW Credit Card and no further action is required on the consumer 's part and provide no further details! This can and does AFFECT ONE 's CREDIT SCORE. I can not make a rational decision as to my options without knowing the interest rate ( S ) on all options and PenFed tells me they can not determine an interest rate UNTIL AFTER the CARD has been ISSUED! 

While I am not an expert in Regulation Z I believe that PenFed 's practice, above, seems to violate Regulation Z - summarized below : The Truth in Lending Act and Regulation Z protect consumers because : Customers are assured they will learn the actual and total cost of credit they obtain from an institution for personal, family, or household reasons before becoming indebted. 
Customers receive easy-to-understand information about home-collateralized loans, including loan terms, rates, conditions, risk, negative amortization possibilities, etc. 
In some instances, customers have time to reconsider entering into a loan where their principal residence is being used as collateral for the loan. 
Customers are protected from inaccurate or unfair billing practices. 
Customers are assured that credit cards and associated procedures are regulated, including a method to resolve credit card disputes. 
Customers are assured that advertised products and/or rates are truly available as advertised. 

Another concern is that PenFed states there are certain requirements that must be met to be come a member at PenFed. I asked XXXX, if PenFed buys accounts, such as this, en masse, how do they vet the individual for membership ( or do they vet the individual to insure they meet the membership requirements ) and isn't this a " backdoor '' just to obtain new members and he said it may be. For PenFed to advertise certain requirements and then invisibly, in purchase and electronic transfer violate those standards seems to border on false advertising. Please advise me how I could be wrong in making this observation. 

Another concern : Is it legal for XXXX XXXX to sell the account without notifying the owner of the account, providing them details and giving the owner any and all available options? 

THE IRONY OF IT ALL : When I created the account at XXXX XXXX I initially asked PenFed for the account and they turned me down! NOW they are buying the account they REFUSED to open when I requested it from PenFed!! 

If all of this weren't so serious - it would be funny! 

I thank all of those involved in the processing of this complaint and appreciate all of you efforts on my behalf.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation