Need proof of racial profiling in credit card offers? Ask Rich Aguirre.

Rich Aguirre knows firsthand how racial profiling works. The longtime credit counselor at Take Charge America, a Phoenix-based nonprofit credit counseling agency, says his Spanish surname has generated an interesting mix of unsolicited credit card offers.

The credit card offers come to his Arizona home in both English and Spanish -- but the terms are dramatically different. English mail offers 9.99 percent interest rates and $5,000 credit limits while the Spanish language offers are for up to $500 with 19.99 percent or higher interest rates plus $100 in annual fees.

"It sort of annoyed me," says Aguirre, who brought the incident up during a recent interview about sharing credit card accounts. "In English it comes to me a certain way and in Spanish I get another offer."

Fee harvesting
What incensed him more was the fact that the Spanish language solicitations were for so-called "fee harvesting" credit cards. These are the cards typically marketed to people with bad credit. Credit card issuers offer low credit limits of about $500 and charge upfront fees (i.e., account opening fees, annual fees, security deposits or account maintenance fees) before the card is ever used. The fees eat up most of the available balance on the account and the user may be close to going over the limit with the very first purchase -- risking over-the-limit fees.

Fee harvesting cards are so reviled that the Federal Reserve Board has included them in proposed new credit card rules targeting "unfair or deceptive" practices. Regulators want to ban the cards if upfront "fees or deposits utilize the majority of the available credit on the account," according to the proposed rule. Also, fees that exceed 25 percent of the available credit limit would have to be spread over the first year of card use, rather than piled on at the beginning.

Aguirre says he sent the mailers to the Arizona state attorney general's office to investigate possible exploitation of Hispanics in the state. Advocates from the National Consumer Law Center and the Center for Responsible Lending have complained that fee harvesting card issuers deliberately target minority communities for offers. 

Fed redlining study
Racial differences in credit card lending has been documented before. A study released earlier this year by the Boston Federal Reserve found racial profiling based on where credit card applicants live. Credit card applicants living in black neighborhoods (as identified by U.S. Census tract data) were less likely to get credit cards than applicants living in white areas -- even if they had the same credit history.

In Aguirre's case, he had the same credit history because he was the same person.

See related: Who gets credit cards may be a matter of black and white, Evils of "fee harvesting" credit cards known for a long time