Consumer Financial Protection Bureau Capital One Probe Outcomes In 0M In Penalties
| 06:54:00 |
The CFPB 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 monitor third-party services being sold with its cards, resulting in more than $200 million in fees and restitution.
Consumer Financial Protection Bureau finally finishes first issue
Until now, the CFPB has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
When the Consumer Financial Protection Bureau found that Capital One, a charge card issuer, was not very clear about who was selling what with its third-party vendors 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 announced that the agency has finished enforcing its first action against the business.
Targeting a group
There are other services that can be purchased through third party distributors to go with Capital One Charge cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of somebody who is sick or injured and cannot make it to work. It is a sort of insurance against missing a payment. The other service offered is credit monitoring.
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 customer had bad credit, the customer would be pressured into buying 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 customer.
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 score would improve with the product.
Huge penalties assessed
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these vendors were selling and how they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fees. Of that, $25 million will go to the CFPB, 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 credit 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 consumers to get paid out cash. There will be 2.5 million companies in the U.S. who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial as well.
Consumer Financial Protection Bureau finally finishes first issue
Until now, the CFPB has not really done anything to enforce or change things except it added a few little laws. It has had a controversial start.
When the Consumer Financial Protection Bureau found that Capital One, a charge card issuer, was not very clear about who was selling what with its third-party vendors 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 announced that the agency has finished enforcing its first action against the business.
Targeting a group
There are other services that can be purchased through third party distributors to go with Capital One Charge cards, according to ABC. One of them, payment protection, will make a minimum payment on behalf of somebody who is sick or injured and cannot make it to work. It is a sort of insurance against missing a payment. The other service offered is credit monitoring.
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 customer had bad credit, the customer would be pressured into buying 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 customer.
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 score would improve with the product.
Huge penalties assessed
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these vendors were selling and how they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fees. Of that, $25 million will go to the CFPB, 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 credit 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 consumers to get paid out cash. There will be 2.5 million companies in the U.S. 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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