'Fee-Harvesting' Credit Cards Keep Debt Growing

"Cardholders were referred to as the scum of the earth and the lowlifes that we deal with, and they're all a bunch of deadbeats," Taylor says.

Abessinio recently settled the class action suit for which Taylor was deposed. He agreed to pay $27.1 million in restitution and fee-credits to current and former customers of his companies.

That suit is one of several filed against Abessinio and his companies in the past 10 years.

Attorneys General from nine states have sued Abessinio and his companies for unfair marketing and collection practices. Eight settled the suits with Abessinio, allowing him to agree to modify his business practices without admitting wrongdoing.

The Federal Deposit Insurance Company, or FDIC, insures Applied Bank's deposits and, by law, regulates its activities. In 2002, it issued a cease and desist order against Abessinio's bank and questioned the company's lending practices.

There is no record of any formal FDIC enforcement action against the bank since 2002. It is not clear if the FDIC has issued what it calls "informal" enforcement actions, secret orders FDIC regulators say are not made public. An FDIC spokesperson told ABCNews the agency could not comment on pending investigations or confirm if they exist.

The new Chairwoman of the FDIC Sheila Bair agreed to a taped interview to discuss "fee-harvesting" credit cards, but her staff abruptly canceled the meeting when they learned the discussion would focus on Abessinio and Applied.

Delware's Banking Commissioner, Robert Glen, is responsible for enforcing Applied Bank's state banking charter. He too initially agreed to an interview, but stopped returning a producer's calls or e-mails after he was told the conversation would focus on Applied.

Visa, the credit card processing network with which Applied does business, refused to comment on this story, as did the American Bankers Association.

Waives Fees to Get GMA 'Off His Back'

One organization agreed to discuss fee-harvesting credit cards with ABC News.

The president of the American Financial Services Association, which lobbies on behalf of credit card services and other lenders, says Applied Bank is not a member of his organization. But, he says, he does defend the concept of cards with high fees and low balances as a way to improve credit.

"If they are informed and they truly know what they're getting into, or the credit card that they're signing up for, then we think it's a business decision that each individual has to make on their own," Chris Stineberg told Chris Cuomo in an interview for "Good Morning America."

Stinebert told Cuomo he believes fees and interest rates should not be capped by the government, but should be dictated by the open market.

"Do we make people that are paying on time pay a higher rate, and have fewer options?" Stinebert said. "Or do you make the people who are not making their payments on time have to pay according to what their risk, analyzed, really is?"

Stinebert adds that his organization believes credit card disclosures should be fair and should not include the "fine print" Alvarez and her mother say they encountered when signing up for the Applied Bank card.

Unlike most Applied Bank customers, Alvarez and Koslan eventually had all of their fees waived, but not because they asked.

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