Capital One, the bank that has all those Vikings in its commercials, has settled a regulatory probe into its charge card marketing by the Consumer Financial Protection Bureau, the first such case for the bureau. The Consumer Financial Protection Bureau Capital One case has resulted in the bank having to pay over $200 million in penalties and reparations.
Capital One issue fixed
The start of the Consumer Financial Protection Bureau was really controversial, regardless of the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
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 distributors who were selling financial products to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first action against the company.
Poor target group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through third party distributors, according to ABC, and are meant as a type of insurance. If an individual 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 consumers called to activate their cards, they were routed to call centers. Oftentimes, the call would last about two minutes and no pitches were made. However, customers 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 customer would not really qualify. They would also promise that a credit rating would improve with the product.
Millions in charges
Because of the investigation, it was concluded that Capital One does not have the ability to regulate vendors 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 extra products with credit cards. It also was ordered to pay $210 million in penalties; 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 ton of money in England in 1997 because of a similar case. There are 2.5 million customers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
Capital One issue fixed
The start of the Consumer Financial Protection Bureau was really controversial, regardless of the truth that it has taken almost a year for the bureau to do anything besides enact a few laws.
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 distributors who were selling financial products to go with the cards. That was why the Consumer Financial Protection Bureau started the probe and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first action against the company.
Poor target group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through third party distributors, according to ABC, and are meant as a type of insurance. If an individual 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 consumers called to activate their cards, they were routed to call centers. Oftentimes, the call would last about two minutes and no pitches were made. However, customers 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 customer would not really qualify. They would also promise that a credit rating would improve with the product.
Millions in charges
Because of the investigation, it was concluded that Capital One does not have the ability to regulate vendors 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 extra products with credit cards. It also was ordered to pay $210 million in penalties; 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 ton of money in England in 1997 because of a similar case. There are 2.5 million customers who will, later this year, receive their money, according to USA Today. Capital One is going to make things right.
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