Capital One to Pay $210M in U.S. Consumer Agency's First Action
Capital One is not quite "No Hassle" according to federal charges that the credit card company violated consumer protection requirements.
Capital One will pay $210 million to settle charges raised by the Consumer Financial Protection Bureau. The majority of that money will go to consumers but $60 million will be paid out in fines.
This if the CFPB's first enforcement action since the federal agency was created about a year ago. Its purpose is to protect consumers from financial threats, including hidden or excessive fees, reports The Washington Post.
Capital One's policies were problematic because of the way they deceived customers into spending more money.
When customers called to activate their new Capital One card, representatives used "deceptive practices" to sell unnecessary add-on services, according to the charges by CFPB.
Individuals who bought those services between August 2010 and January 2012 will be reimbursed with settlement funds.
Consumer protection has increased in the last few years with growing concern over unfair practices by banks and other financial institutions. The goal is to promote transparency between credit cards or banks and their customers. Practices that aren't clear are penalized.
Capital One's method of selling add-ons didn't clearly show whether or not extra services were needed as indicated by CFPB's action.
The laws about credit cards are still evolving and it can be hard to tell bad business from illegal practices. Talking to a consumer protection attorney can clarify if a company's actions are against the law.
CFBP's first consumer protection against Capital One indicates that the agency will be a key player from here on out. $25 million of the settlement will go to the agency's civil penalty fund.
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