Magazine article American Banker

Fleet Draws Fire for Big Mailing of Unsolicited Loan Checks

Magazine article American Banker

Fleet Draws Fire for Big Mailing of Unsolicited Loan Checks

Article excerpt

Fleet Financial Group is being accused of making credit too easily available to consumers in the Northeast.

Some recipients of the Boston-based company's "live check" mailing, one of a growing number of pre-approved offers to deposit a bank loan directly into a customer's account, have registered complaints with Fleet.

The Massachusetts attorney general's office also said it had received telephone calls and may investigate the marketing practice further - if it receives written requests to do so.

"It does sound like something we would look into," said assistant attorney general Pamela Kogut.

The concerns center on the unsolicited nature of the offers and an ease of access to credit lines - Fleet last week mailed 675,000 checks for as much as $7,500 to "pre-approved" customers - that could encourage borrowers to overextend.

One consumer advocate said the program is "ripe for misunderstanding." "People are having money waved in front of them, and they are not really sure of the terms," said Bruce Dorpalen, director of loan counseling at the Philadelphia-based community group, Acorn Housing Corp.

The practice and the public outcry are reminiscent - though still on a far smaller scale - of the unsolicited credit card offers that caused significant bank losses in the 1960s, leading to enactment of the Truth-in Lending law.

The current check-credit trend is a new wrinkle on the pre-approved credit lines that became a staple of credit card marketing in recent years. Signet Banking Corp.'s chief financial officer, Wallace Millner 3d, told Wall Street analysts last month that problems in its "loan-by-check" program were likely to lower second-quarter earnings. …

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