The Consumer Financial Protection Bureau (CFPB) announced its first public enforcement action last week. The settlement involves Capital One and charges that it engaged in the deceptive marketing of credit card add-on products like payment protection and credit monitoring. Between $140 million and $150 million will serve as restitution to 2 million customers. Another $60 million in fines will be paid to the CFPB and the Office of the Comptroller of the Currency (OCC). This settlement represents a joint effort between the CFPB and the OCC.
According to the CFPB's press release, Bureau examiners found that Capital One's call-center employees engaged in deceptive practices when selling consumers various add-on services when they called to activate new cards.
Some of the tactics used by the call-center employees were: misleading customers about the benefit of the products, not informing customers that the products were optional purchases, misleading customers as to their eligibility for products like payment protection, misinforming customers about the cost of the products, and enrolling customers without their consent.
In addition to the cash payments, the settlement with Capital One includes the following promises from Capital One:
- End deceptive marketing: Capital One has ceased all marketing of these products, and will not resume doing so until Capital One submits a compliance plan, acceptable to the Bureau, which helps ensure these unlawful acts do not occur in the future.
- Pay claims denied based on ineligibility at enrollment: For any of these eligible consumers whose payment protection claims were previously denied because their loss occurred prior to enrollment (because of unemployment, disability, etc.), Capital One will pay their claims as if they had been eligible, if that amount is greater than the refund for that consumer.
- Convenient repayment for consumers: If the consumers are still Capital One customers, they will receive a credit to their accounts. If they are no longer a Capital One credit card holder, they will receive a check in the mail. Consumers are not required to take any action to receive their credit or check.
- Independent audit: Compliance with the terms of this agreement will be assured through the work of an independent auditor, who will determine if Capital One has complied with the CFPB's Consent Order.
If you believe that you are entitled to receive funds from this settlement, you can find out more about how you will be reimbursed by going to this link.