Gander Mountain Co. filed a lawsuit against its credit card issuer, Columbus, Ohio-based World Financial Network
National Bank over its credit card approval policies. The outdoor retailer claims a proposed new policy will deny customers with good credit from being approved for its store credit card.
According to the suit, World Financial is threatening to automatically deny new credit-card applications to customers with the best credit scores – those with FICO scores of 800 or higher – because they lose money for the bank, according to the St. Paul Business Journal. Gander Mountain filed its suit Thursday in in Minneapolis' U.S. District Court.
The maximum FICO score is 850.
World Financial has not responded to the suit.
In documents presented to Gander Mountain by World Financial – and included in Gander Mountain's legal filing – World Financial said the accounts of customers with high credit scores are unprofitable because they bring in less revenue from financing than other accounts.
About a quarter of customers with Gander Mountain fall into the specified credit range and would have been denied under the proposed policy.
Instead, the suit alleges, World Financial would offer those customers a private label card with lower credit limits, fewer rewards and no online servicing options.
The companies' current co-brand card agreement calls for World Financial to pay Gander Mountain $37 for every new account, according to the suit, or about $420,000 per year. The bank said, according to the business journal, that not having to pay the bounty on accounts with good credits could make them profitable for World Financial.
But Gander Mountain refused to change the agreement, the suit said, and World Financial threatened to implement the denial policy on its own.
Gander Mountain believes the new policy will start on July 1. The company said in its suit that denying creditworthy customers goes against the public interest in “encouraging financing to qualified consumers with the ability to pay debts.”
World Financial also issues credit cards for retailers including Victoria's Secret, J. Crew, Express, Pottery Barn, Ann Taylor, Trek, New York & Co. and Abercrombie & Fitch, according to online application sites.
