The CFPB has finally finished its first regulatory probe. The investigation was conducted into credit card-related products sold by vendors used 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.
Found and fixed first issue
The start of the Consumer Financial Protection Bureau was really controversial, despite the fact that it has taken almost a year for the bureau to do anything besides enact a few laws.
Capital One, a charge card company, was the first target of the Consumer Financial Protection Bureau who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The Consumer Financial Protection Bureau started a probe to the business 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.
Targeting a group
There are credit monitoring services and payment protection offered for Capital One consumers who have credit cards. These are provided through 3rd party distributors, 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.
When the typical consumer 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 consumer would be pressured into buying the additional products from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the consumer.
Phone operators promised things like purchasing the product would improve credit scores, or that consumers who were already jobless could get a few payments made for them from payment protection, which requires the policy holder to be employed.
Capital One charges
Capital One has to pay $210 million in in penalties because it lost the ability to regulate what was being sold and the way it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary charge card goods until it can find ways to regulate the goods better. $150 million of the fee will be given to Capital One clients who were deceived, $35 million will go to the Office of the comptroller of the Currency, and $25 million will be paid to the CFPB.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank settled a comparable case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable CFPB investigation.
Found and fixed first issue
The start of the Consumer Financial Protection Bureau was really controversial, despite the fact that it has taken almost a year for the bureau to do anything besides enact a few laws.
Capital One, a charge card company, was the first target of the Consumer Financial Protection Bureau who has brought and settled its first enforcement action against it, according to the Wall Street Journal. The Consumer Financial Protection Bureau started a probe to the business 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.
Targeting a group
There are credit monitoring services and payment protection offered for Capital One consumers who have credit cards. These are provided through 3rd party distributors, 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.
When the typical consumer 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 consumer would be pressured into buying the additional products from the call center representative. The rep would exaggerate the service a ton and would take at least 8 minutes to talk to the consumer.
Phone operators promised things like purchasing the product would improve credit scores, or that consumers who were already jobless could get a few payments made for them from payment protection, which requires the policy holder to be employed.
Capital One charges
Capital One has to pay $210 million in in penalties because it lost the ability to regulate what was being sold and the way it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary charge card goods until it can find ways to regulate the goods better. $150 million of the fee will be given to Capital One clients who were deceived, $35 million will go to the Office of the comptroller of the Currency, and $25 million will be paid to the CFPB.
According to USA Today, the 2.5 million customers wronged in the case will receive their money later this year. It is the second time Capital One has faced such charges, as the bank settled a comparable case in England in 1997, according to ABC. Discover Financial is said to be currently facing a comparable CFPB investigation.
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