The Consumer Financial Protection Bureau has finally finished its first regulatory investigation. The probe was carried out into credit card-related products sold by vendors employed by Capital One, in an illegal manner. The CFPB Capital One case has led to the bank spending more than $200 million in penalties and restitution.
Controversial agency solves a problem
The CFPB, 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 charge card business, was the first target of the Consumer Financial Protection Bureau who has brought and resolved its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the company because it found that third-party distributors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through third party vendors, according to ABC, and are meant as a kind 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 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 ton 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 additional 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 different false promises made by operators. One promise was that customers could improve their credit rating by getting the product while some operators promised those who were unemployed that they could be able to get some payments made in payment protection without actually being employed first. Both these things were lies to consumers.
More than $200 million in penalties
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and how they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fines. Of that, $25 million will go to the Consumer Financial Protection Bureau, 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 even stop selling ancillary charge card goods until it can ensure proper conduct.
Capital One dealt with a similar case in England in 1997, according to ABC, which also require consumers to get paid out money. There will be 2.5 million corporations in the U.S. who will receive their money soon, according to USA Today. A Consumer Financial Protection Bureau investigation like this is being done with Discover Financial also.
Controversial agency solves a problem
The CFPB, 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 charge card business, was the first target of the Consumer Financial Protection Bureau who has brought and resolved its first enforcement action against it, according to the Wall Street Journal. The CFPB started a probe into the company because it found that third-party distributors who were selling financial products on the cards such as credit protection were not clearly named by Capital One. This led to the following suit.
Problem with target group
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through third party vendors, according to ABC, and are meant as a kind 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 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 ton 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 additional 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 different false promises made by operators. One promise was that customers could improve their credit rating by getting the product while some operators promised those who were unemployed that they could be able to get some payments made in payment protection without actually being employed first. Both these things were lies to consumers.
More than $200 million in penalties
The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and how they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fines. Of that, $25 million will go to the Consumer Financial Protection Bureau, 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 even stop selling ancillary charge card goods until it can ensure proper conduct.
Capital One dealt with a similar case in England in 1997, according to ABC, which also require consumers to get paid out money. There will be 2.5 million corporations in the U.S. who will receive their money soon, according to USA Today. A Consumer Financial Protection Bureau investigation like this is being done with Discover Financial also.
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