The Consumer Financial Protection Bureau said its supervisors discovered that Capital One Financial Corp’s third-party vendors engaged in deceptive tactics to sell ancillary products to the company’s credit cards. Photographer: Paul Taggart/Bloomberg
Capital One Financial Corp. (COF) will pay a total of $210 million to settle charges of deceptive marketing of credit card “add-on” products such as payment protection and credit monitoring.
It was the first public enforcement case brought by the Consumer Financial Protection Bureau, established by the Dodd-Frank Act to increase oversight of consumer financial products. The bureau and the Office of the Comptroller of the Currency, the bank’s primary regulator, said Capitol One agreed to provide between $140 million and $150 million in restitution to 2 million customers and pay an additional $60 million in penalties– $25 million to the CFPB and $35 million to the OCC.
The McLean, Virginia-based company didn’t admit or deny wrongdoing. Its shares fell 1.4 percent to $55.01 in New York at 3:00 p.m., cutting their gain for the year to 30.1 percent.
“Today’s action puts $140 million back in the pockets of two 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 DirectorRichard Cordray, referring to the refund amount in the consumer bureau’s settlement. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
In a conference call with reporters, Cordray said that other card issuers who market similar products face CFPB enforcement actions as well.
“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.”
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