Capital One, the bank that has all those Vikings in its commercials, has resolved a regulatory probe into its charge card marketing by the Consumer Financial Protection Bureau, the first such case for the agency. The Consumer Financial Protection Bureau Capital One case has led to the bank having to pay more than $200 million in penalties and reparations.
Found and fixed first issue
The start of the CFPB was really controversial, despite 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 CFPB who has brought and resolved its first enforcement motion 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 distributors 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.
Issue with target group
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through 3rd party distributors, according to ABC, and are meant as a kind 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 the average customer called to activate a card, it took about 2 minutes with no sales pitches to get it all figured out at a call center. If the consumer had bad credit, the consumer would be pressured into purchasing the additional goods from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the consumer.
Phone operators promised things like purchasing 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.
Massive penalties assessed
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and just how they were selling it to consumers. As a result, Capital One has agreed to pay $210 million in penalties. Of that, $25 million will go to the Consumer Financial Protection Bureau, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will also stop selling ancillary charge card products until it can ensure proper conduct.
Capital One dealt with a comparable case in England in 1997, according to ABC, which also require customers to get paid out cash. There will be 2.5 million companies in the United States who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial as well.
Found and fixed first issue
The start of the CFPB was really controversial, despite 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 CFPB who has brought and resolved its first enforcement motion 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 distributors 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.
Issue with target group
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through 3rd party distributors, according to ABC, and are meant as a kind 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 the average customer called to activate a card, it took about 2 minutes with no sales pitches to get it all figured out at a call center. If the consumer had bad credit, the consumer would be pressured into purchasing the additional goods from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the consumer.
Phone operators promised things like purchasing 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.
Massive penalties assessed
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and just how they were selling it to consumers. As a result, Capital One has agreed to pay $210 million in penalties. Of that, $25 million will go to the Consumer Financial Protection Bureau, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will also stop selling ancillary charge card products until it can ensure proper conduct.
Capital One dealt with a comparable case in England in 1997, according to ABC, which also require customers to get paid out cash. There will be 2.5 million companies in the United States who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial as well.
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