The Consumer Financial Protection Bureau has finally finished its first regulatory probe. The investigation was conducted into credit card-related products sold by vendors employed by Capital One, in an unlawful manner. The Consumer Financial Protection Bureau Capital One case has resulted in the bank having to pay more than $200 million in fines and restitution.
First fix from Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau, regardless of its controversial beginnings and controversial appointment of a director, hasn't really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.
When the CFPB found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party distributors who were selling financial goods to go with the cards. That was why the Consumer Financial Protection Bureau started the investigation and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first motion against the business.
Target group a problem
The bank also offers some additional services to go with having a Capital One credit card, according to ABC, which is sold through third-party distributors. Those services consist of credit monitoring and payment protection, used if an individual is injured or sick and cannot make a payment due to missing work. In that case a minimum payment is made on their behalf, a type of insurance against missing a charge card payment.
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, 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.
Enormous penalties assessed
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and how it was being sold with the 3rd 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.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank resolved a similar case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable Consumer Financial Protection Bureau investigation.
First fix from Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau, regardless of its controversial beginnings and controversial appointment of a director, hasn't really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.
When the CFPB found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party distributors who were selling financial goods to go with the cards. That was why the Consumer Financial Protection Bureau started the investigation and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first motion against the business.
Target group a problem
The bank also offers some additional services to go with having a Capital One credit card, according to ABC, which is sold through third-party distributors. Those services consist of credit monitoring and payment protection, used if an individual is injured or sick and cannot make a payment due to missing work. In that case a minimum payment is made on their behalf, a type of insurance against missing a charge card payment.
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, 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.
Enormous penalties assessed
Capital One has to pay $210 million in in fines because it lost the ability to regulate what was being sold and how it was being sold with the 3rd 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.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank resolved a similar case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable Consumer Financial Protection Bureau investigation.
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