The litigation industry’s newest player is now in the game. Capital One has just accepted an order from the The Consumer Financial Protection Bureau to pay $ 210 million in fines and refunds for fraudulent practices in connection with its credit card business. The violations center around fraudulent practices in connection with sales of useless "insurance" for credit card debt. The full story is in DealBook – some key lines are pasted below." The bank derives about 1/3 of its business from subprime lending and seems like a fitting target for the first fine from the nation’s new federal watch dog agency.
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"In the Capital One case, regulators say the bank allowed its call centers to deceptively sell certain credit card products to customers. The products included a plan to allow customers to seek protection from bills if they lost their job – and debt forgiveness in the case of death or permanent disability. The bank also offered so-called credit monitoring, a feature that came with identity-theft protection and “credit education” for customers with a spotty borrowing history.
In a 30-page order, the consumer bureau outlined how the bank’s call centers marketed and sold products to ineligible unemployed consumers, who despite paying for the services, never received the full benefits. At some call centers, a vendor working for the bank imposed the products without the consumer’s consent. In other cases, according to the bureau, the bank employed “high pressure tactics,” including misleading customers into thinking the product was free, mandatory and would bolster credit scores.
Under the deal with regulators, Capital One must halt the deceptive practices and submit to an independent audit. The bank must also fully repay its customers who fell victim to the scheme."