CompuCredit is an Atlanta collections and consumer finance company that markets subprime products. Its product lines have included credit cards, and payday loans (pejoratively called micro-loans), along with collections on those kinds of products.
CompuCredit claims to target the 43 million (about 27 percent) Americans with a credit score below 650, as well as the 50 million Americans with no credit score at all.
They keep that sub-prime work in house, for the most part. They provide Emblem, Embrace, and Majestic credit cards. Not only do they provide subprime credit, but they also operate a "debt recovery" (collections!) through their subsidiary, Jefferson Capital.
CompuCredit has decided to sell its payday business. It announced in a recent filing that it will spin off its
payday subsidiary, Purpose Financial Holdings. Purpose, upon the sale, will become an independent publicly trading company.
Purpose operates from storefronts throughout the Southeast and through the Internet. It had a bit more than $90 million in revenue in 2009. Its loans are for amounts less than $500.
Activism appears to have prompted these changes. An article in Collections and Credit Risk quotes a KBW analyst who says that "separating the payday business would be a prudent decision," because so many investors want to stay away from payday lending.
It is also a product of regulatory intervention. In 2008, CompuCredit agreed to a $114 million settlement with the Federal Trade Commission and the FDIC, on grounds that it failed to adequately disclose its fee structure. CompuCredit was marketing a credit card with a $300 credit limit. It was aimed at people seeking to restore their credit. CompuCredit did not disclose that fees on the card would by $185, so that the $300 card would only come with $115 in credit.