Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory probe into its credit card marketing by the CFPB, the first such case for the bureau. The Consumer Financial Protection Bureau Capital One case has resulted in the bank having to pay more than $200 million in fees and reparations.
CFPB finally finishes first problem
Until now, the CFPB has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
When the Consumer Financial Protection Bureau found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party vendors who were selling financial products to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal announced that the bureau has finished enforcing its first action against the company.
Issue with target group
There are credit monitoring services and payment protection offered for Capital One consumers who have charge cards. These are provided through 3rd party vendors, according to ABC, and are meant as a type of insurance. If a person misses work because they are sick or injured and cannot make a payment, a minimum payment is made on the behalf of the person.
When consumers called to activate their cards, they were routed to call centers. In many cases, the call would last about two minutes and no pitches were made. However, consumers with poor credit who had gotten subprime cards, would often have to listen to at least 8 minutes of sales pitches from phone operators, many of whom pressured them into sales, lied about a cost being involved or exaggerated the scope of the services.
There were different false promises made by operators. One promise was that customers could improve their credit score by getting the product while some operators promised those who were unemployed that they might be able to get some payments made in payment protection without really being employed first. Both these things were lies to consumers.
Getting charged big fees
The investigation decided that Capital One, now part of ING, lost the ability to regulate what these vendors were selling and the way they were selling it to consumers. As a result, Capital One has agreed to pay $210 million in penalties. Of that, $25 million will go to the Consumer Financial Protection Bureau, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will even stop selling ancillary credit card products until it can ensure proper conduct.
Discover financial is facing the Consumer Financial Protection Bureau on similar charges, meaning Capital One is not alone. Capital One also had to pay out a ton of cash in England in 1997 because of a similar case. There are 2.5 million customers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
CFPB finally finishes first problem
Until now, the CFPB has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
When the Consumer Financial Protection Bureau found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party vendors who were selling financial products to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal announced that the bureau has finished enforcing its first action against the company.
Issue with target group
There are credit monitoring services and payment protection offered for Capital One consumers who have charge cards. These are provided through 3rd party vendors, according to ABC, and are meant as a type of insurance. If a person misses work because they are sick or injured and cannot make a payment, a minimum payment is made on the behalf of the person.
When consumers called to activate their cards, they were routed to call centers. In many cases, the call would last about two minutes and no pitches were made. However, consumers with poor credit who had gotten subprime cards, would often have to listen to at least 8 minutes of sales pitches from phone operators, many of whom pressured them into sales, lied about a cost being involved or exaggerated the scope of the services.
There were different false promises made by operators. One promise was that customers could improve their credit score by getting the product while some operators promised those who were unemployed that they might be able to get some payments made in payment protection without really being employed first. Both these things were lies to consumers.
Getting charged big fees
The investigation decided that Capital One, now part of ING, lost the ability to regulate what these vendors were selling and the way they were selling it to consumers. As a result, Capital One has agreed to pay $210 million in penalties. Of that, $25 million will go to the Consumer Financial Protection Bureau, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will even stop selling ancillary credit card products until it can ensure proper conduct.
Discover financial is facing the Consumer Financial Protection Bureau on similar charges, meaning Capital One is not alone. Capital One also had to pay out a ton of cash in England in 1997 because of a similar case. There are 2.5 million customers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
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