Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory probe into its charge card marketing by the CFPB, the first such case for the agency. The Consumer Financial Protection Bureau Capital One case has resulted in the bank having to pay more than $200 million in penalties and reparations.
CFPB finally finishes first problem
The Consumer Financial Protection Bureau, 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.
When the CFPB found that Capital One, a charge 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 CFPB started the probe and then the suit. The Wall Street Journal publicized that the agency has finished enforcing its first motion against the company.
Poor target group
There are other services that could be bought through third party vendors to go with Capital One Credit cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of somebody 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 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, customers 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 false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the consumer would not really qualify. They would also promise that a credit score would improve with the product.
Capital One charges
Capital One has to pay $210 million in in fees because it lost the ability to regulate what was being sold and the way it was being sold with the third party vendors. The bank has to stop selling Ancillary credit 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.
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 similar case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable Consumer Financial Protection Bureau investigation.
CFPB finally finishes first problem
The Consumer Financial Protection Bureau, 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.
When the CFPB found that Capital One, a charge 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 CFPB started the probe and then the suit. The Wall Street Journal publicized that the agency has finished enforcing its first motion against the company.
Poor target group
There are other services that could be bought through third party vendors to go with Capital One Credit cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of somebody 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 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, customers 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 false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the consumer would not really qualify. They would also promise that a credit score would improve with the product.
Capital One charges
Capital One has to pay $210 million in in fees because it lost the ability to regulate what was being sold and the way it was being sold with the third party vendors. The bank has to stop selling Ancillary credit 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.
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 similar case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable Consumer Financial Protection Bureau investigation.
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