The Consumer Financial Protection Bureau is cracking down on credit card… (McClatchy Tribune )
The watchdog is finally showing its teeth.
The Consumer Financial Protection Bureau has ordered Capital One Bank to refund $150 million to about 2 million customers for deceptive marketing of payment protection and other add-on products sold with its credit cards.
The federal Office of the Comptroller of the Currency, which oversees big banks but doesn't do much in the way of making them squirm, joined in the enforcement action.
Cap One also has to pay $60 million in civil penalties for the practices.
"Today’s action puts $140 million back in the pockets of 2 million Capital One customers who were pressured or misled into buying credit card products they didn’t understand, didn’t want, or in some cases, couldn’t even use," said Richard Cordray, director of the Consumer Financial Protection Bureau.
"We are putting companies on notice that these deceptive practices are against the law and will not be tolerated."
This is the first such crackdown by the agency and, as such, represents a new level of commitment to watching the backs of consumers.
The agency's investigators found that Capital One's call-center vendors "engaged in deceptive tactics" to persuade customers with low credit scores or credit limits to pay for additional features when they activated their credit cards.
Those products included payment protection if the customer was unemployed or temporarily disabled, and monitoring of their credit for identity theft and other problems. But, as I've written before, such plans often feature lots of fine print that limits how much protection you're actually receiving.
Hopefully other banks will now clean up their acts before they too face such penalties.
And hopefully the agency's conservative critics will at last accept that, yes, there is a need for someone to make sure consumers are treated fairly.