In a recent press release, the Consumer Financial Protection Bureau (CFPB) announced its first public enforcement action. An investigation of Capital One Bank’s marketing practices identified deceptive tactics used by Capital One’s call-center vendors to trick consumers into buying costly add-on products such as payment protection and credit monitoring when they activated their credit cards. The CFPB held Capital One responsible for the behavior of the third-party vendors. Some of the tactics used by the vendors were:
leading consumers to believe that the product would improve their credit score,
not telling consumers that buying the product was optional,
telling consumers that they were required to purchase the product in order to receive full information about it but that they could cancel if they were not satisfied, and then making it difficult to cancel,
leading consumers to believe they were enrolling in a free product, and
enrolling consumers without their consent.
Under the terms of the settlement, Capital One agreed to:
refund $140 million to two million customers and to pay an additional $25 million penalty,
end deceptive marketing and submit a compliance plan to CFPB
pay any payment protection claims that were previously denied
Capital One card division president Ryan Schneider apologized to customers and acknowledged responsibility for the actions their third-party vendors undertook on Capital One’s behalf.
Customers who either initially enrolled in a product on or after August 1, 2010, or who tried to cancel a product on or after August 1, 2010 but were persuaded to keep the product after speaking to a call center representative will receive a refund of the amount paid for the product plus the associated finance charges, any over-the-limit fees, and interest. If customers 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 fill out any paperwork to receive their credit or check.
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