Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory investigation into its charge card marketing by the CFPB, the first such case for the bureau. The CFPB Capital One case has resulted in the bank having to pay over $200 million in penalties and reparations.
Controversial agency solves an issue
The start of the Consumer Financial Protection Bureau was really controversial, in spite of the fact that it has taken almost a year for the agency to do anything besides enact a few laws.
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 distributors who were selling financial goods to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal publicized that the agency has finished enforcing its first action against the business.
Targeting a 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 kind 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. 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 different false promises made by operators. One promise was that consumers could improve their credit rating by purchasing the product while some operators promised those who were unemployed that they might be able to get some payments made in payment protection without actually being employed first. Both these things were lies to customers.
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 distributors. 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 Consumer Financial Protection Bureau.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank resolved a comparable case in England in 1997, according to ABC. Discover Financial is said to be currently facing a similar CFPB investigation.
Controversial agency solves an issue
The start of the Consumer Financial Protection Bureau was really controversial, in spite of the fact that it has taken almost a year for the agency to do anything besides enact a few laws.
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 distributors who were selling financial goods to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal publicized that the agency has finished enforcing its first action against the business.
Targeting a 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 kind 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. 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 different false promises made by operators. One promise was that consumers could improve their credit rating by purchasing the product while some operators promised those who were unemployed that they might be able to get some payments made in payment protection without actually being employed first. Both these things were lies to customers.
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 distributors. 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 Consumer Financial Protection Bureau.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank resolved a comparable case in England in 1997, according to ABC. Discover Financial is said to be currently facing a similar CFPB investigation.
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