CFPB Capital One Case Finalized With $200M In Fines
Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory probe into its charge card marketing by the Consumer Financial Protection Bureau, the first such case for the bureau. The Consumer Financial Protection Bureau Capital One case has led to the bank having to pay over $200 million in fines and reparations.
Capital One issue fixed
Until now, the Consumer Financial Protection Bureau has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
Capital One, a credit card company, was the first victim of the CFPB who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The Consumer Financial Protection Bureau started a probe to 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 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 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 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 rating would improve with the product.
Huge fees assessed
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and just how 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 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 Consumer Financial Protection Bureau on similar charges, meaning Capital One is not alone. Capital One also had to pay out a ton of money in England in 1997 due to a comparable 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.
Capital One issue fixed
Until now, the Consumer Financial Protection Bureau has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
Capital One, a credit card company, was the first victim of the CFPB who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The Consumer Financial Protection Bureau started a probe to 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 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 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 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 rating would improve with the product.
Huge fees assessed
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and just how 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 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 Consumer Financial Protection Bureau on similar charges, meaning Capital One is not alone. Capital One also had to pay out a ton of money in England in 1997 due to a comparable 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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