Capital One, the bank that has all those Vikings in its commercials, has resolved a regulatory investigation into its charge card marketing by the Consumer Financial Protection Bureau, the first such case for the agency. The CFPB Capital One case has resulted in the bank having to pay over $200 million in fines 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.
Capital One, a credit card company, was the first victim of the Consumer Financial Protection Bureau who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the company because it found that third-party vendors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One consumers who have credit cards. These are provided through 3rd party distributors, according to ABC, and are meant as a sort 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 customers 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 getting 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.
Capital One fees
Because of the probe, it was decided that Capital One does not have the ability to regulate vendors well enough to know what is being sold to customers and just how it is being sold. Until the bank can ensure product conduct, it can no longer sell the extra goods with credit cards. It also was ordered to pay $210 million in fees; the Office of the Comptroller will get $35 million and the CFPB will get $25 million. The other $150 million will be given to Capital One clients as restitution.
Capital One dealt with a comparable case in England in 1997, according to ABC, which also require consumers to get paid out cash. There will be 2.5 million companies in the U.S. who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial also.
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.
Capital One, a credit card company, was the first victim of the Consumer Financial Protection Bureau who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the company because it found that third-party vendors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One consumers who have credit cards. These are provided through 3rd party distributors, according to ABC, and are meant as a sort 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 customers 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 getting 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.
Capital One fees
Because of the probe, it was decided that Capital One does not have the ability to regulate vendors well enough to know what is being sold to customers and just how it is being sold. Until the bank can ensure product conduct, it can no longer sell the extra goods with credit cards. It also was ordered to pay $210 million in fees; the Office of the Comptroller will get $35 million and the CFPB will get $25 million. The other $150 million will be given to Capital One clients as restitution.
Capital One dealt with a comparable case in England in 1997, according to ABC, which also require consumers to get paid out cash. There will be 2.5 million companies in the U.S. who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial also.
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