Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory investigation into its charge card marketing by the Consumer Financial Protection Bureau, 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 penalties and reparations.
Found and fixed first issue
The start of the CFPB was really controversial, regardless of the belief that it has taken almost a year for the agency to do anything besides enact a few laws.
Capital One, a credit card business, was the first target of the CFPB who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the business because it found that third-party distributors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Target group an issue
There are other services that can be purchased through third party distributors to go with Capital One Charge cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of someone who is sick or injured and cannot make it to work. It is a type of insurance against missing a payment. The other service offered is credit monitoring.
When consumers called to activate their cards, they were routed to call centers. Oftentimes, 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 false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the consumer would not really qualify. They would also promise that a credit rating would improve with the product.
Millions in charges
The investigation decided that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and just how 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 also stop selling ancillary charge card goods until it can ensure proper conduct.
Discover financial is facing the Consumer Financial Protection Bureau on comparable charges, meaning Capital One is not alone. Capital One also had to pay out a lot of cash in England in 1997 due to a similar case. There are 2.5 million consumers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
Found and fixed first issue
The start of the CFPB was really controversial, regardless of the belief that it has taken almost a year for the agency to do anything besides enact a few laws.
Capital One, a credit card business, was the first target of the CFPB who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the business because it found that third-party distributors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Target group an issue
There are other services that can be purchased through third party distributors to go with Capital One Charge cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of someone who is sick or injured and cannot make it to work. It is a type of insurance against missing a payment. The other service offered is credit monitoring.
When consumers called to activate their cards, they were routed to call centers. Oftentimes, 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 false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the consumer would not really qualify. They would also promise that a credit rating would improve with the product.
Millions in charges
The investigation decided that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and just how 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 also stop selling ancillary charge card goods until it can ensure proper conduct.
Discover financial is facing the Consumer Financial Protection Bureau on comparable charges, meaning Capital One is not alone. Capital One also had to pay out a lot of cash in England in 1997 due to a similar case. There are 2.5 million consumers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
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