Capital One Fined by Two Groups for Misleading Customers

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Capital One was fined on Wednesday by the Consumer Financial Protection Bureau for pressuring and misleading over two million credit card customers. Capital One agreed that it would pay $210 million to settle two regulatory cases. The consumer agency accused Capital One of misleading customers into purchasing products such as credit monitoring and payment protection. Part of the deal with the consumer bureau, Capital One has to reimburse $140 million to its customers. Capital One was also sanctioned by the Office of the Comptroller of the Currency for bogus billing practices.

“We are putting companies on notice that these deceptive practices are against the law and will not be tolerated,” said Richard Cordray, the director of the consumer bureau. Cordray ran the consumer bureau’s enforcement division prior to becoming the director. The president of credit cards at Capital One, Ryan M. Schneider, said that the wrongdoing took place at outside call centers that “did not always adhere to company sales scripts.” Schneider also said the company was “accountable for the actions that vendors take on our behalf. We apologize to those customers who were impacted and we are committed to making it right.”

  

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The action taken against Capital One was the first of its kind by the consumer bureau, which is attempting to exercise its enforcement ability in the country’s financial market. The case was announced on the second anniversary of the bureau’s founding. The bureau was the focal point of the regulatory overhaul by Dodd-Frank that was passed after the financial crisis in the United States. The bureau is responsible for protecting consumers from financial malfeasance while also writing rules for mortgages and credit cards.

Regulators said that Capital One officials permitted call centers to deceptively sell specific credit card products to customers. A couple of those products included debt forgiveness should one die or become permanently disabled. Another product was protection from bills should one lose their job. In the deal with the regulators, Capital One has to stop the deceptive practices and agree to an independent audit. Victims of the bank’s schemes must also be fully repaid.

The fine levied on Capital One by the Office of the Comptroller of the Currency totals $35 million for practices performed from 2002 to June of 2011. “Unfair and deceptive practices will not be tolerated,” Thomas J. Curry, the comptroller, said on Wednesday. Capital One has to pay over $210 million between the restitution to its customers and the fines from the comptroller. In 2010, Capital One was cited by the comptroller for uses ‘unfair’ fees when customers tried to close their accounts with the bank.