Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory probe into its charge card marketing by the Consumer Financial Protection Bureau, the first such case for the agency. The CFPB Capital One case has resulted in the bank having to pay over $200 million in fines and reparations.
Found and resolved first issue
The CFPB, despite its controversial beginnings and controversial appointment of a director, hasn't really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.
The agency has brought and also finished its first enforcement motion, according to the Wall Street Journal, against charge card company Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial goods to go with Capital One's charge cards, like credit protection and payment protection. Capital One was topic of a CFPB investigation, which found that the card issuer was culpable in not doing enough due diligence on who was selling what.
Distributors targeted poor credit card holders
There are other services that can be bought through 3rd party vendors 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 sort of insurance against missing a payment. The other service offered is credit monitoring.
When the average consumer called to activate a card, it took about 2 minutes with no sales pitches to get it all figured out at a call center. If the consumer had bad credit, the customer would be pressured into buying the additional products from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the customer.
Phone operators promised things like purchasing the product would improve credit scores, or that consumers who were already jobless could get a few payments made for them from payment protection, which needs the policy holder to be employed.
More than $200 million in penalties
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and how it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary charge card products until it can find ways to regulate the goods better. $150 million of the fee will be given to Capital One clients who were deceived, $35 million will go to the Office of the comptroller of the Currency, and $25 million will be paid to the CFPB.
Discover financial is facing the CFPB on similar charges, meaning Capital One is not alone. Capital One also had to pay out a lot of money 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 resolved first issue
The CFPB, despite its controversial beginnings and controversial appointment of a director, hasn't really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.
The agency has brought and also finished its first enforcement motion, according to the Wall Street Journal, against charge card company Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial goods to go with Capital One's charge cards, like credit protection and payment protection. Capital One was topic of a CFPB investigation, which found that the card issuer was culpable in not doing enough due diligence on who was selling what.
Distributors targeted poor credit card holders
There are other services that can be bought through 3rd party vendors 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 sort of insurance against missing a payment. The other service offered is credit monitoring.
When the average consumer called to activate a card, it took about 2 minutes with no sales pitches to get it all figured out at a call center. If the consumer had bad credit, the customer would be pressured into buying the additional products from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the customer.
Phone operators promised things like purchasing the product would improve credit scores, or that consumers who were already jobless could get a few payments made for them from payment protection, which needs the policy holder to be employed.
More than $200 million in penalties
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and how it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary charge card products until it can find ways to regulate the goods better. $150 million of the fee will be given to Capital One clients who were deceived, $35 million will go to the Office of the comptroller of the Currency, and $25 million will be paid to the CFPB.
Discover financial is facing the CFPB on similar charges, meaning Capital One is not alone. Capital One also had to pay out a lot of money 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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