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Published on: 6/5/2008
Last Visited: 6/11/2008
Mike Keller, University of South Dakota business school dean, said arrangements between First Bank and Trust and CompuCredit are called rent-a-charters.They allow the credit card company to rent the bank's charter to issue credit cards.
"Sometimes it's difficult for the bank to know or control what the marketing companies say or don't say," he said."You have to be cautious."
While banks might have copies of a credit card company's marketing materials, what is said between sales associates and consumers could be different, Keller said.
"What people say may not be close to what is in the brochures or online materials," he said.
The FDIC could force CompuCredit and the Brookings bank to divest their partnership.The credit card company will likely control liability and be forced to pay.If the amount isn't enough, the FDIC could come after the bank, said Keller, who knows the Fishbacks.
"A lot of that will depend on how well protected they were in the documents," he said."They were culpable at the most (for) maybe failure to somehow spot this."
The FDIC and FTC must prove there is fraud on the sales and collections side, and Keller said he doubted the bank committed fraud, noting their obligation had nothing to do with selling cards or debt collection.