Wednesday, July 18, 2012
Consumers Union, the policy and advocacy division of Consumer Reports, praised the settlement as an example of why consumers need the CFPB.
“This is exactly why the Consumer Financial Protection Bureau was created – to help protect consumers from banking schemes, misleading claims, and confusing fine print,” said Pamela Banks, senior policy counsel for Consumers Union. “Some banks have been relying on tricks and traps to increase profits for too long, and consumers have paid the high price for it. This action should serve as a notice to banks that there are consequences for bending the rules and not being upfront with your customers.”
The agreement specifies that Capital One will pay about $140 million to refund 2 million customers who purchased add-on services between August 2010 and January 2012 and a $25 million penalty to the CFPB. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency for the add-on product marketing abuses as well as for unfair billing practices. Customers affected by the unfair billing practices will get approximately $10 million in refunds.
According to the CFPB, current Capital One customers who are eligible for a refund and have an open account will have the refund automatically credited to their accounts. Consumers who are eligible but no longer have an account with Capital One will have a check mailed to them. The CFPB says consumers should expect to receive their refunds later this year, and consumers with questions about eligibility for a refund should contact Capital One.
Consumers Union advises consumers to beware of scammers who may try to charge people for assisting with Capital One refunds. Consumers with questions about the Capital One settlement can visit the CFPB site here.
David Butler and Kara Kelber, 202-462-6262