Cabela's has agreed to pay nearly $10.4 million for “alleged unfair and deceptive practices” of its credit card operation as part of a settlement with federal regulators. It also agreed to reform its credit card practices. The Federal Deposit Insurance Corporation announced the agreement with Cabela on Tuesday.

According to the settlement, World's Foremost Bank, Cabela's credit card operation, will pay $10.1 million in restitution and a $250,000 civil money
penalty. The retailer did not admit wrongdoing.

The FDIC said it determined that WFB did not operate its credit card
programs “in an appropriate manner with regards to certain overlimit
fees, credit line decreases, minimum payments due, late fees, penalty
interest rates, notices to customers, and collection practices. The
Consent Order, in part, requires WFB to correct the violations of law,
develop appropriate policies and procedures to ensure future compliance,
and effectively monitor third-party agreements and activities.”

In agreeing to the issuance of the Consent Order, World's Foremost Bank said it “does not admit
nor deny any liability.”

Cabela's agreed to eliminate improper fees it charged some customers for
late payments and exceeding credit limits. It will also change the way
it handles penalty interest rates, collection practices and notices to
customers.

Under the agreement, overall, World's Foremost Bank agreed to refrain
from:

* Assessing excessive and improper over-limit fees, including
assessing the fees after lowering cardholders' credit limits.

* Contacting cardholders at their workplaces for the purpose of
collections even after receiving verbal or written requests to
cease the calls.

* Assessing late fees when payments that were due on a Sunday or
holiday were received the following business day.

* Assessing a penalty interest rate on balances that existed
before the event that caused the penalty interest rate to be
imposed.

* Implementing an increase in penalty rates without providing
adequate notice to cardholders.

Cabela's also agreed to to perform a full review of the account history
of all credit card accounts and identify every cardholder's account
to which one or more of the practices defined in the consent order
occurred, then determine the amount charged as a result of those
practices and interest accrued on those fees and apply appropriate
credits as payments to each eligible cardholder's account or
provide cash refunds if the adjustments produce a credit balance
for the account.

The FDIC said several bank practices violated Section 5 of the
Federal Trade Commission Act as well as the Truth in Lending
Act.

The allegations stemmed from a 2009 compliance examination first
revealed by Cabela's in May. In February, the company said it had
agreed to a settlement with the FDIC in principle and estimated its
pre-tax liability for restitution and fines to be $8 million.

The settlement was still less than their initial estimated
liability of $18 million.

In an e-mail sent to the Lincoln Journal Star, an FDIC spokesperson said said in an e-mail that there are
approximately 296,000 eligible cardholders entitled to the
restitution payments.