Cuomo broadens investigation of CareCard

New York Attorney General Andrew Cuomo (D) recently launched an investigation into health care credit cards offered to patients by their health care providers. Cuomo, a gubernatorial candidate, said his investigation into GE Money's CareCredit revealed that a number of health care providers pressured consumers into applying for the CareCredit card, "through fast-talking sales pitches and deceit." The investigation also found that GE Money paid kickbacks to the providers based on how much they charged patients on their CareCredit cards.

The results of the initial investigation were were enough for Cuomo to broaden the investigation to Chase Health Advance, Visa Health Benefits, and Citibank Health Card. As part of this larger investigation Cuomo issued subpoenas to these companies and 10 health care providers.

According to the office, many consumers contended that their providers promised that the CareCredit card carried no interest on services offered. However, users often found that interest rates were retroactive and higher than 25 percent if patients didn't pay off the usage within a promotional period. Users also said they unknowingly were "charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored."

CareCredit's terms of service state that "interest will be charged to your account from the purchase date if the promotional balance...is not paid in full within 6, 12, 18 or 24 months or if you make a late payment." In addition, "If promo and debt cancellation are not paid in full within 6, 12, 18 or 24 months, interest at 26.99 percent will be assessed from purchase date." The cards also carry a penalty interest rate of 29.99 percent.

CareCredit paid providers within 48 hours of charge submissions, Cuomo's office alleged. And the investigation found that providers received rebates on fees charged for offering the credit card "based on the amount of money the providers generated through CareCredit sales." Coumo's office said the arrangement with providers created an incentive for providers to push patients to use the card rather than cash or other methods of payment.

"Health care debt is the number one cause of individual bankruptcy, and this scheme is contributing to the economic burden being felt by consumers," Cuomo said in a prepared statement.

And Chuck Bell, programs director for Consumers Union, which publishes Consumer Reports, asserted, "Attorney General Cuomo's investigation shines a badly-needed spotlight on deceptive practices used to market health care credit cards to elderly and low-income consumers."

-Chris Meehan