The Consumer Financial Protection Bureau has finally finished its first regulatory probe. The probe was carried out into credit card-related goods sold by distributors employed by Capital One, in an unlawful method. The CFPB Capital One case has resulted in the bank spending more than $200 million in fines and restitution.
First fix from CFPB
The Consumer Financial Protection Bureau, in spite 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.
The bureau has brought and also finished its first enforcement action, according to the Wall Street Journal, against credit card business Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial products to go with Capital One's credit cards, like credit protection and payment protection. Capital One was subject of a CFPB investigation, which found that the card issuer was culpable in not doing enough due diligence on who was selling what.
Target group an issue
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through 3rd party vendors, according to ABC, and are meant as a kind 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.
When consumers called to activate their cards, they were routed to call centers. In many cases, the call would last about two minutes and no pitches were made. However, consumers with poor credit who had gotten subprime cards, would often have to listen to at least 8 minutes of sales pitches from phone operators, many of whom pressured them into sales, lied about a cost being involved or exaggerated the scope of the services.
Phone operators promised things like buying 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 needs the policy holder to be employed.
More than $200 million in fees
Capital One has to pay $210 million in in fees because it lost the ability to regulate what was being sold and just how it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary credit card goods until it can find ways to regulate the products 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.
Capital One dealt with a similar case in England in 1997, according to ABC, which also require customers to get paid out cash. There will be 2.5 million corporations in the U.S. who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial as well.
First fix from CFPB
The Consumer Financial Protection Bureau, in spite 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.
The bureau has brought and also finished its first enforcement action, according to the Wall Street Journal, against credit card business Capital One. The CFPB Capital One case stemmed from third-party vendors who were selling financial products to go with Capital One's credit cards, like credit protection and payment protection. Capital One was subject of a CFPB investigation, which found that the card issuer was culpable in not doing enough due diligence on who was selling what.
Target group an issue
There are credit monitoring services and payment protection offered for Capital One customers who have credit cards. These are provided through 3rd party vendors, according to ABC, and are meant as a kind 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.
When consumers called to activate their cards, they were routed to call centers. In many cases, the call would last about two minutes and no pitches were made. However, consumers with poor credit who had gotten subprime cards, would often have to listen to at least 8 minutes of sales pitches from phone operators, many of whom pressured them into sales, lied about a cost being involved or exaggerated the scope of the services.
Phone operators promised things like buying 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 needs the policy holder to be employed.
More than $200 million in fees
Capital One has to pay $210 million in in fees because it lost the ability to regulate what was being sold and just how it was being sold with the 3rd party vendors. The bank has to stop selling Ancillary credit card goods until it can find ways to regulate the products 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.
Capital One dealt with a similar case in England in 1997, according to ABC, which also require customers to get paid out cash. There will be 2.5 million corporations in the U.S. who will receive their money soon, according to USA Today. A CFPB investigation like this is being done with Discover Financial as well.
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