The CFPB has brought its first enforcement motion against Capital One. The Consumer Financial Protection Bureau Capital One case has been fixed, as the bank unsuccessful to watch third-party services being sold with its cards, resulting in more than $200 million in penalties and restitution.
Capital One issue fixed
The start of the Consumer Financial Protection Bureau was really controversial, despite the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
The agency has brought and also finished its first enforcement action, according to the Wall Street Journal, against credit card business Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial products to go with Capital One's credit 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 charge card holders
There are other services that could be bought through 3rd party distributors to go with Capital One Credit 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 typical 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 customer had bad credit, the consumer would be pressured into buying the extra goods 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 buying the product would improve credit scores, or that customers who were already jobless could get a few payments made for them from payment protection, which needs the policy holder to be employed.
Millions in fees
The probe 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 customers. As a result, Capital One has agreed to pay $210 million in fees. 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 credit card products until it can ensure proper conduct.
According to USA Today, the 2.5 million consumers 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 settled a comparable case in England in 1997, according to ABC. Discover Financial is said to be currently facing a similar CFPB investigation.
Capital One issue fixed
The start of the Consumer Financial Protection Bureau was really controversial, despite the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
The agency has brought and also finished its first enforcement action, according to the Wall Street Journal, against credit card business Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial products to go with Capital One's credit 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 charge card holders
There are other services that could be bought through 3rd party distributors to go with Capital One Credit 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 typical 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 customer had bad credit, the consumer would be pressured into buying the extra goods 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 buying the product would improve credit scores, or that customers who were already jobless could get a few payments made for them from payment protection, which needs the policy holder to be employed.
Millions in fees
The probe 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 customers. As a result, Capital One has agreed to pay $210 million in fees. 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 credit card products until it can ensure proper conduct.
According to USA Today, the 2.5 million consumers 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 settled 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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