Petal is a financial technology provider with consumer credit cards issued by WebBank. Petal has violated UDAAP and implemented an unfair practice that hurts its consumers en-masse. Petal, which markets itself to subprime borrowers with poor, limited, and no credit, recently implemented an $8.00 monthly membership fee. This results in a $96.00 annual fee to utilize the card when all consumers had previously signed up for it because it didn't require an annual fee. The only alternative to "opt out" of this fee is to close your Petal account. Closure of your account would result in the card being ineligible for use and for you to continue to make your monthly payments until your balance is paid in full. UDAAP has three specific criteria for an implemented act/practice to be considered "unfair." (1) It causes or is likely to cause substantial injury to consumers;(2) The injury is not reasonably avoidable by consumers; and(3) The injury is not outweighed by countervailing benefits to consumers or to competition.This new act by Petal meets these requirements. It causes or is likely to cause substantial injury to consumers;As mentioned, Petal targets subprime borrowers and those with no, limited, or poor credit. The APRs charged by Petal are already extremely high because of this, ranging from 24.84%-34.24% -- one of the highest APRs in the industry. This change will cause account holders to either pay a $98 annual fee or lower their available credit utilization (by closing their account), which hurts their credit score. Petal targets users who struggle with traditional credit and approvals -- therefore when their account is closed and their available credit is lowered, it will hurt their credit scores, and they will be even less likely to be offered credit lines from other lenders. Additionally, the customer will need to continue making payments on a loan with an extremely high-interest rate without the benefit of the payments revolving. The injury is not reasonably avoidable by consumers;Current Petal users who would have otherwise not paid a membership fee cannot reasonably avoid monetary financial harm. They do not have the option to opt for a no-fee card alternative offered by Petal. They have one of two choices. 1) accept a $98 annual fee for the lifetime of our account (when it was marketed that the card is a no fees card) or 2) close the account, which will negatively impact credit scores and leave them paying on an extremely high-interest card while limiting the benefits and value of the tradeline they continue to pay for. The injury is not outweighed by countervailing benefits to consumers or to competition.Other credit cards with no annual fees offer the same or better benefits like 1-3% cash back on all purchases (not just on specific merchants), lower APR rates (Petal has some of the industry's highest), credit score monitoring, tap to pay, and mobile wallet. These features are already available on widely popular cards like Wells Fargo Active Cash, Citi Double Cash, and other financial technology companies targeting subprime borrowers like X1. Petal customers have no countervailing benefits for this $96 annual fee, and the card itself is not competitive in the market. Because of the above-listed points, I strongly urge anyone affected by this to file a CFPB complaint. It is a cash grab by a company to make money off subprime borrowers. They either pay $96 a year for the life of their tradeline (a tradeline they marketed as a no-fee card) or continue to pay astronomically high interest, all while removing the benefits of their card service. It's a horrible customer experience and it is illegal under UDAAP.
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