Today, the CFPB entered a consent order that requires subprime credit card company, Continental Finance Company, LLC (“Continental”), to refund an estimated $2.7 million to consumers who were charged alleged illegal credit card fees. The consent order also imposes a civil penalty on Continental in the amount of $250,000.

In the consent order, the CFPB found that Continental required cardholders to pay fees during the credit card account’s first year that exceeded 25% of the account’s initial credit limit, in violation of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the “CARD Act”). As explained in the consent order, Continental cardholders generally received an initial $300 credit line with a required $75 annual “maintenance and set-up” fee, and certain cardholders were charged an additional $4.95 monthly fee for paper statements. For cardholders charged a paper statement fee, the total amount of fees during the first year exceeded the CARD Act’s 25% limit. The consent order notes that, as of December 2014, Continental charged approximately 98,000 cardholders more than $2,670,000 in paper statement fees.

The CFPB also found that Continental had engaged in certain deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010. First, according to the consent order, Continental stated in its cardholder terms and conditions that a cardholder would be charged a monthly paper statement fee if he or she were to “elect” to receive paper statements. Continental, however, then automatically sent certain cardholders paper billing statements and required those cardholders to pay the monthly paper statement fee.

Second, the consent order states that the Continental cardholder agreements for secured and partially secured cards represented that a cardholder’s security deposit would be held in an FDIC insured financial institution. In reality, the consent order asserts, up to $1.8 million in consumer funds deposited during 2013 were not FDIC insured. The consent order also notes that no customer lost any part of his or her cash security deposit as a result of this limited FDIC insurance coverage.

In addition to requiring the estimated $2.7 million in refunds and imposing the $250,000 civil penalty, the consent order enjoins Continental from committing future violations of the applicable laws, and requires Continental to make the refunds by way of a credit, check, or both, to ensure cardholders are not required to take any action to receive their refunds.