CFPB Capital One Case Settled With Hundreds Of Millions In Fines
The Consumer Financial Protection Bureau has brought its first enforcement action against Capital One. The Consumer Financial Protection Bureau Capital One case has been resolved, as the bank failed to watch third-party services being sold with its cards, leading to more than $200 million in penalties and restitution.
Consumer Financial Protection Bureau finally finishes first issue
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.
Capital One, a credit card company, was the first victim of the Consumer Financial Protection Bureau who has brought and settled 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 goods on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Vendors targeted poor credit card holders
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through third party vendors, according to ABC, and are meant as a type 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.
If a customer called the call center to activate a card and had poor credit, it took at least 8 minutes to get through the call while listening to a lot of sales pitches from operators who would over exaggerate the service a ton. There was a lot of pressure in those phone calls to get the extra things. The typical consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.
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 customer would not really qualify. They would also promise that a credit score would improve with the product.
Millions in fees
Because of the probe, it was concluded that Capital One does not have the ability to regulate distributors well enough to know what is being sold to consumers and the way it is being sold. Until the bank can ensure product conduct, it can no longer sell the additional products with charge cards. It also was ordered to pay $210 million in fines; the Office of the Comptroller will get $35 million and the Consumer Financial Protection Bureau will get $25 million. The other $150 million will be given to Capital One clients as restitution.
Discover financial is facing the CFPB on comparable charges, meaning Capital One is not alone. Capital One also had to pay out a lot of cash in England in 1997 because of a similar 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.
Consumer Financial Protection Bureau finally finishes first issue
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.
Capital One, a credit card company, was the first victim of the Consumer Financial Protection Bureau who has brought and settled 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 goods on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Vendors targeted poor credit card holders
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through third party vendors, according to ABC, and are meant as a type 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.
If a customer called the call center to activate a card and had poor credit, it took at least 8 minutes to get through the call while listening to a lot of sales pitches from operators who would over exaggerate the service a ton. There was a lot of pressure in those phone calls to get the extra things. The typical consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.
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 customer would not really qualify. They would also promise that a credit score would improve with the product.
Millions in fees
Because of the probe, it was concluded that Capital One does not have the ability to regulate distributors well enough to know what is being sold to consumers and the way it is being sold. Until the bank can ensure product conduct, it can no longer sell the additional products with charge cards. It also was ordered to pay $210 million in fines; the Office of the Comptroller will get $35 million and the Consumer Financial Protection Bureau will get $25 million. The other $150 million will be given to Capital One clients as restitution.
Discover financial is facing the CFPB on comparable charges, meaning Capital One is not alone. Capital One also had to pay out a lot of cash in England in 1997 because of a similar 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.
