Consumer Financial Protection Bureau takes maiden voyage in enforcement
After much speculation in the financial industry about the powers of the newest federal agency, the Consumer Financial Protection Bureau has come out ahead, announcing a settlement that requires Capital One Bank to refund about $140 million to 2 million customers and pay an additional $60 million in two penalties.
The bureau, working with the Office of the Comptroller of the Currency, determined the credit card company had used its call centers to market deceptive add-ons, or fee-based services, such as payment protection insurance-type plans to account holders as a way to improve their credit scores.
“Today’s action puts $140 million back in the pockets of 2 million Capital One customers who were pressured or misled into buying credit card products they didn’t understand, didn’t want, or in some cases, couldn’t even use,” CFPB Director Richard Cordray said Wednesday, when the announcement was made. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
The company accepted the settlement. "We are accountable for the actions that vendors take on our behalf," said Ryan Schneider, president of Capital One's credit card business. "These marketing calls were inconsistent with the explicit instructions we provided to agents for how these products should be sold. We apologize to those customers who were impacted, and we are committed to making it right." The company halted marketing of the illegal services after being alerted in 2011.
Under the 2011 Dodd-Frank financial reform law, CFPB has the authority to issue consent orders and to take action against institutions engaging in unfair, deceptive or abusive practices.
On its website, CFPB advised customers that they need take no action to receive either credit in their account or a check, though they should be on the lookout for scammers claiming to help consumers obtain the refunds in order to steal their personal identification information.