The CFPB has finally finished its first regulatory investigation. The probe was carried out into credit card-related products sold by vendors used by Capital One, in an illegal manner. The Consumer Financial Protection Bureau Capital One case has led to the bank having to pay more than $200 million in fines and restitution.
Capital One issue fixed
Until now, the CFPB has not really done anything to enforce or change things except it added a few small laws. It has had a controversial start.
When the CFPB 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 company.
Targeting a group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through 3rd party distributors, according to ABC, and are meant as a sort 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.
If a consumer 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 ton of pressure in those phone calls to get the additional things. The average consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.
There were different false promises made by operators. One promise was that consumers could improve their credit rating by purchasing the product while some operators promised those who were unemployed that they can be able to get some payments made in payment protection without really being employed first. Both these things were lies to consumers.
Millions in fees
Because of the investigation, it was concluded that Capital One does not have the ability to regulate distributors well enough to know what is being sold to customers and how it is being sold. Until the bank can ensure product conduct, it can no longer sell the extra products with charge cards. It also was ordered to pay $210 million in fees; the Office of the Comptroller will get $35 million and the CFPB 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 cash in England in 1997 due to 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
Until now, the CFPB has not really done anything to enforce or change things except it added a few small laws. It has had a controversial start.
When the CFPB 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 company.
Targeting a group
There are credit monitoring services and payment protection offered for Capital One customers who have charge cards. These are provided through 3rd party distributors, according to ABC, and are meant as a sort 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.
If a consumer 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 ton of pressure in those phone calls to get the additional things. The average consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.
There were different false promises made by operators. One promise was that consumers could improve their credit rating by purchasing the product while some operators promised those who were unemployed that they can be able to get some payments made in payment protection without really being employed first. Both these things were lies to consumers.
Millions in fees
Because of the investigation, it was concluded that Capital One does not have the ability to regulate distributors well enough to know what is being sold to customers and how it is being sold. Until the bank can ensure product conduct, it can no longer sell the extra products with charge cards. It also was ordered to pay $210 million in fees; the Office of the Comptroller will get $35 million and the CFPB 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 cash in England in 1997 due to 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.