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Capital One has been ordered to pay $210 million to settle allegations it tricked credit card customers into buying unwanted “add-on” products such as payment protection and credit monitoring. Nearly 2 million customers will share a portion of the Capital One credit card settlement, amounting to about $70 apiece. The announcement comes on the heels of a $10.5 million class action lawsuit settlement and $2 million State of Minnesota settlement with Discover Financial Services for the same charges: deceptive marketing of fee-based products.
The Capital One credit card product settlement was the first public enforcement case brought by the federal government’s new Consumer Financial Protection Bureau, established by the Dodd-Frank Act to increase oversight of consumer financial products. The agency said Capital One customers were wrongly led to believe by call center workers that they needed to buy the add-on services to activate their cards or that debt protection or credit monitoring was free. Other customers were left with the impression that their credit scores would improve with the purchase, while some got billed even though they weren’t eligible.
The bulk of the settlement will go to consumers, with $60 million going toward penalties, $25 million to the CFPB, and $35 million the Office of the Comptroller of the Currency.
“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 CFPB Director Richard Cordray. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
Cordray said the CFPB will seek restitution for injured consumers in future enforcement actions, including against Discover Financial Services, which reached a class action lawsuit settlement this year to settle charges it deceptively marketed fee-based products, including debt protection and credit monitoring. The CFPB said it has already subpoenaed Discover.
“We know these deceptive marketing tactics for credit card add-on products are not unique to a single institution,” Cordray said. “We expect announcements about other institutions as our ongoing work continues to unfold.”
Capital One apologized for the deceptive credit card marketing tactics and blamed it on third-party vendors.
“Capital One’s third-party vendors did not always adhere to company sales scripts and sales policies for payment protection and credit-monitoring products, and the bank did not adequately monitor their activities,” the bank said in a statement.
Refunds from the Capital One credit card settlement will be automatically credited to customer accounts if they’re eligible. Eligible customers who no longer have a Capital One account will have a check mailed to them. Refunds are expected to be handed out later this year. Customers are urged to watch out for spammers claiming they will get them a refund. More information can be found in this post from the CFPB.
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41 thoughts onCapital One to Pay $210M Credit Card Settlement
had a capital One acct,lost my job, tried to make payment got behind on my account of 300.00 it cost me $3504, I am being sued for.late fees and collection fees.
BIG RIPOFF. Credit is ruined.
I was disabled while having the card. They told me to keep the Protection on the card (paid for each month) and when I receive the letter for Social Security Benefits, I would be covered up to $10,000 of debt owed. When it came down to putting a claim in, I wasn’t eligible because I was disabled and the plan won’t cover person with their own business. Now have a Collection and paying $25 per month.
Capital One is crap. They have a collection against me for $1800 from a $500 credit card. Everything over the $300 I used is FEES. I would pay up to a week early and they would hold my funds until after the due date, charge me a late fee, then state I did not make the minimum payment since the late fee was taken out of the money I sent to make the minimum payment. I called and told them they had better fix it. When they did not I told them I would pay ONLY the $300 I had originally used, but I was never able to catch it up as they played the game every time I sent payment. The Class Action suite against them does not seem to cover this, but does cover that the collections agency would call and state I needed to call Capital One, then when I called it was the collections. Anyone else had this issue? I opened a Cap One card to build credit as I had none, and now they are ruining what little credit I do have that I have worked very hard to build. Any information on other people with the same issue, and how they or you have removed this would be great. Thank you.
had a capital one card,had to bankrup to get it off me.
This was my first credit card when I was younger, It’s the main reason my credit score is crap now. I spent $300, and somehow ended up owing them over $1,000 in very little time. Couldn’t pay it off until I was older so I could raise my credit score, and they never raised it, as they said they would.
I have them charge to my credit for all kinds of protections plans but when I was hospitalize I was consider deliquent a pay it up and try to hang on for my credit so it wont go to my TRW. But It really costly if those services doesn’t help peoples out but monthly and monthly charge can raise a high balance.
I had one and was a victim of this with them. Hard to get them to discontinue and close out acct.
Dont think I qill ever get this paid off
i have a capital one card for year and had to remortagage my home topay off.
Have Capital One Credit Card