By Carter Dougherty and Dakin Campbell
July 18 (Bloomberg)
Capital One Financial Corp. will pay a total of $210 million to settle charges of deceptive marketing of credit card “add-on” products such as payment protection and credit monitoring.
It was the first public enforcement case brought the Consumer Financial Protection Bureau, established by the Dodd- Frank Act to increase oversight of consumer financial products.
The bureau and the Office of the Comptroller of the Currency, the bank’s primary regulator, said Capitol One agreed to provide between $140 million and $150 million in restitution to 2 million customers and pay an additional $60 million in penalties
– $25 million to the CFPB and $35 million to the OCC.
The McLean, Virginia-based company did not admit or deny wrongdoing.
“Today’s action puts $140 million back in the pockets of two 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,” said CFPB Director Richard Cordray, referring to the refund amount in the consumer bureau’s settlement. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
The CFPB said its supervisors discovered that Capital One’s third-party vendors engaged in deceptive tactics to sell ancillary products to the company’s credit cards. The products included “payment protection” that allows customers to cancel up to 12 months of minimum payments if they face unemployment or temporary disability.
The vendors also sold credit-monitoring services, which promised identity-theft protection and access to “credit education specialists,” the CFPB said.
