Capital One, the bank that has all those Vikings in its commercials, has resolved a regulatory probe into its credit card marketing by the CFPB, the first such case for the bureau. The Consumer Financial Protection Bureau Capital One case has resulted in the bank having to pay over $200 million in penalties and reparations.
CFPB, Capital One resolve first enforcement by agency
The start of the CFPB was really controversial, regardless of the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
When the CFPB 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 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 bureau has finished enforcing its first motion against the business.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through 3rd party distributors, according to ABC, and are meant as a kind of insurance. If an individual 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. In many cases, 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.
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.
More than $200 million in fees
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 third party distributors. The bank has to stop selling Ancillary charge card products until it can find ways to regulate the products 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 ton of cash in England in 1997 because of 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.
CFPB, Capital One resolve first enforcement by agency
The start of the CFPB was really controversial, regardless of the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
When the CFPB 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 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 bureau has finished enforcing its first motion against the business.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through 3rd party distributors, according to ABC, and are meant as a kind of insurance. If an individual 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. In many cases, 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.
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.
More than $200 million in fees
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 third party distributors. The bank has to stop selling Ancillary charge card products until it can find ways to regulate the products 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 ton of cash in England in 1997 because of 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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