Consumer Financial Protection Bureau Capital One case resolved with millions in fees

The Consumer Financial Protection Bureau has brought its first enforcement action against Capital One. The Consumer Financial Protection Bureau Capital One case has been fixed, as the bank failed to monitor third-party services being sold with its cards, resulting in more than $200 million in penalties and restitution. Resource for this article:

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Controversial bureau solves a problem

The start of the Consumer Financial Protection Bureau was really controversial, despite the truth 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 vendors who were selling financial products to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal announced that the agency has finished enforcing its first action against the company.

Poor target group

There are other services that could be bought through third 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.

If a customer called the call center to activate a card and had poor credit, it took at least 8 minutes to get through the call while listening to a ton of sales pitches from operators who would over exaggerate the service a ton. There was a ton of pressure in those phone calls to get the additional things. The average consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.

There were different false promises made by operators. One promise was that customers could improve their credit score by getting the product while some operators promised those who were unemployed that they can be able to get some payments made in payment protection without really being employed first. Both these things were lies to consumers.

Capital One charges

Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and the way it was being sold with the 3rd party distributors. The bank has to stop selling Ancillary charge card goods 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.

Capital One dealt with a comparable case in England in 1997, according to ABC, which also require consumers to get paid out money. There will be 2.5 million companies in the United States who will receive their money soon, according to USA Today. A Consumer Financial Protection Bureau investigation like this is being done with Discover Financial also.

Sources

Wall Street Journal

ABC

USA Today

Tags: capital one, cfpb capital one, consumer financial protection bureau, credit card protection

Posted by ashtonking on Fri, 11/28/2014 - 8:25pm