The one-year-old Consumer Financial Protection Bureau handed down its first enforcement action today slapping Capital One bank with millions of dollars in fines for deceptive marketing tactics used by the bank’s vendors to pressure or mislead its credit-card customers into paying for “add-on products.”
Capital One agreed to pay $210 million in fines and restitution, including $150 million to some 2.5 million customers who bought credit monitoring or “payment protection” services between 2002 and 2012. Consumers with low incomes and low credit scores were misled about the benefits and costs of the programs by call center vendors when they had their cards activated. For instance, some call center representatives sold “payment protection”–which forgives some credit-card payments and debt if a customer loses a job, becomes incapacitated, or dies–to consumers who were ineligible because they were already unemployed or disabled when they signed up. Others weren’t told that the programs were voluntary, while others were enrolled without their consent, and then had difficulty when they tried to withdraw from the programs. Customers will get either a check in the mail or a credit to their account.
The action was taken in coordination with the Office of the Comptroller of the Currency, which also slapped Capital One with a $35 million fine in addition to the $25 million fine assessed by the CFPB. The enforcement action also requires the bank to stop the sales and marketing of any add-on product that promises debt suspension, debt cancellation, and credit and identity monitoring.
Earlier this year, the Consumer Reports Money Adviser newsletter analyzed credit-monitoring and ID-theft protection products, many marketed by banks, and found that they provide questionable value to consumers.
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