Providian Financial Corp. has become ensnarled in an investigation by the San Francisco District Attorney's office and what may become a class action civil lawsuit filed by consumers.

The plaintiffs are alleging and the D.A. is investigating whether the San Francisco-based credit card issuer overcharged customers and engaged in misleading and high-pressure sales tactics.

But despite the courtroom troubles, sources said Providian's securitization volume will actually grow this year as origination levels are higher than average, and the company embarks on a more active role in terms of public issuance.

Providian specializes in issuing credit cards to people with below average credit histories. The firm has securitized approximately $3.6 billion since entering the ABS market in 1996.

Last year, Providian focused on mostly private transactions, but a source close to the company said it will be bringing deals out of its master trust this year.

An official at the firm said the allegations will not affect outstanding ABS, but refused to elaborate or comment further.

Oakland's Better Business Bureau has received 850 complaints over add-on products, like auto memberships and credit protection, that are alleged to have never been asked for. Other complaints allege hidden charges and unfair late fees.

Providian's revenues on late and over-limit charges, add-on products, and other customer fees grew 470% to $700 million, while overall revenue rose only 120% to $2.4 billion. Providian also securitizes home equity loans. - SK

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