SCLC Criticized for Allying with CompuCredit in FDIC Suit

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This article contains additional reporting by Matthew Cardinale, News Editor

compucredit(APN) ATLANTA — Some civil rights leaders are criticizing the historic Southern Christian Leadership Council (SCLC) for the organization’s recent partnership with, and public defense of, CompuCredit, an Atlanta-based credit card servicer which charges exorbitant fees to consumers with poor credit.

Several corporations are listed as platinum supporters on the SCLC’s website. However, the inclusion of CompuCredit, which is being sued simultaneously by the Federal Trade Commission (FTC) and the Federal Deposit Insurance Corporation (FDIC) for deceptive practices, has been questioned.

The SCLC announced a partnership with CompuCredit last year at their 50th Anniversary celebration.

On January 30, 2008, the SCLC provided CompuCredit’s Vice President of Corporate Affairs, Denise Harrod, a Presidential Award at its Dr. Martin Luther King Service Awards Breakfast.

The partnership between the two groups involved CompuCredit providing financial literacy services and the SCLC providing, it appears, their good name.

“It is a blot on the legacy of a formerly great organization and on the legacy of Dr. Martin Luther King. We need more justice for the poor, not exploitation. They ought to be ashamed. It is reprehensible that the SCLC would partner with these people. Obviously money is involved. They had no business giving seminars with these people,” State Sen. Vincent Fort told Atlanta Progressive News.

Another civil rights leader was disturbed by the partnership, but spoke to APN on condition of anonymity because he is a director of a major civil rights organization and has to work with the SCLC almost every day.

As recently reported in depth by Atlanta Progressive News, the FDIC sued CompuCredit earlier this month for $200 million in restitution for cheating sub-prime consumers, plus a fine of $6.2 million.

The Federal Trade Commission is asking that they cease their activities and make restitution.

CompuCredit is charged with misleading consumers concerning extensions of credit, not disclosing fees, claiming in some cases to fix credit when in reality they were a collection agency, and collection practices involving harassment of consumers.

One credit card, the Aspire Visa, issued by CompuCredit, provided customers with a $300 credit line, but charged $150 in annual fees, $6.50 in monthly fees, and a $29 account opening fee, leaving customers with only $115 available to make their first purchase.

The company states in their brochure that they target the “sub-prime” consumer and, in addition to credit cards, profited from payday lending, “pay on the lot” auto financing, and the buying of debt for collection.

Rather than distancing themselves, the SCLC put out a statement of support of CompuCredit.

“We have been engaged with CompuCredit since 2004, and announced a major partnership with the company last August to foster better availability and understanding of credit. CompuCredit has been a true friend to the SCLC and to the communities and individuals it serves, and in our opinion is one of the few financial services companies that is working diligently to increase access to credit in underserved communities,” SCLC President, Dr. Charles Steele, said in a press release.

“In working with CompuCredit over this time period, we carefully reviewed the company’s operations including analyzing solicitation materials provided to consumers – including the very materials that are a part of the FTC and FDIC lawsuit. From our point of view, the disclosures in these materials were clear and comprehensible, far more than the materials of similar companies used during the same period,” Dr. Charles Steele President of SCLC stated.

“They do not bite the hand that feeds them,” Sen. Fort said.

“The CompuCredit partnership is going to take money and we are still working on that,” Dr. Steele responded to Atlanta Progressive News, when asked how much money CompuCredit had paid the organization.

“I am about helping people. We help people to better their lives. We need to let people know by paying their bills they can get credit. I got my house with credit,” Dr. Steele stated in an interview.

“First of all we are talking about the principle of Dr. Martin Luther King. He was very strong on one, gathering information, two, educating the people with that information, three, negotiating. We are at the second phase.” Dr. Steele stated.

“The last two steps of Dr. Martin Luther King’s are direct action and reconciliation. There is always reconciliation,” Steele said.

It is unclear what happened to step four, direct action: Steele fired his political action committee last year.

“The SCLC just got rid of its direct action wing, including Rev. Fred Taylor and Brenda Davenport,” the anonymous source told APN. “Steele shut down the direct action wing, which was the only credible part of the SCLC because they were going up against corporations like these.”

“It signaled the idea they didn’t want to fight anymore, to protest anymore,” the source said.

The SCLC was in trouble in 2004 when Steele was hired. The organization had less than 3000 members, and had only generated $18,000 from their dues that year. The assets of the organization were rapidly disappearing.

Fred Shuttlesworth, Steele’s predecessor, resigned in 2004 as President of SCLC with a two page letter that said, “Only God can give life to the dead.” The SCLC was in ruins.

Steele brought in corporate sponsorship to address the organization’s financial problems. The corporate sponsors they list on their website include Anheuser Busch, CompuCredit, Wal-Mart, AT&T, Burger King, Georgia Pacific, Georgia Power, UPS, and Verizon. Their new building was paid for by AGL, Batch and Bingham, BellSouth, Cousins Properties, Dr. David Allen, Georgia Pacific, HJ Russell and Co, IBM, Sun Trust Bank, Coca Cola, Home Depot, Troutman and Sanders, and Wachovia.

Although Atlanta Progressive News obtained the SCLC’s IRS 990 forms for years 2005 and 2006, they did not contain itemized lists of donations from each corporation or when these were obtained.

SCLC has not yet replied to a written request for this information.

In general, though, the SCLC’s income went from around $300,000 in 2005 to over $2 million in 2006. They had not filed their 2007 990 form as of June 23, 2008, and therefore it was not made available.

Sen. Fort feels the SCLC was created by Dr. Martin Luther King to serve the interests of poor people and not to support the membership of the organization and those most able to pay for it.

“CompuCredit is in the business of supporting people who take advantage of people. It is shameful… The fact of the matter is the SCLC is standing up for the industry that is ripping off the poor,” Fort stated.

“I am about helping people,” Steele responded to APN. “We help people to better their lives… I got my house with credit. You can’t sit around and not do anything. You have to educate the people. What do you do if you don’t start? If you complete the program you will be able to compete… Folks are still going without. Where can you go if you can’t go to a bank or credit union? You have no choice but to hit someone over the head or rob someone,” Steele said.

About the author:

Alice Gordon is a Staff Writer for The Atlanta Progressive News and may be reached at alice@atlantaprogressivenews.com

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