If you're a current or former Capital One customer, you may be
receiving a refund from the company later this year.
The refunds -- which total about $140 million and will be issued
to two million customers -- are the result of the
first public enforcement action
taken by the federal Consumer Financial Protection Bureau (CFPB),
which said that Capital One had deceived its customers into paying
for "add-on products" related to the company's credit cards.
The CFPB was created last year with the intention of helping
better personal finance decisions
, as well as monitor markets and review complaints regarding credit
cards, mortgages, deposit accounts and other financial products.
But the announcement marks the first time the agency has acted to
penalize a company.
High-pressure call centers to blame
In announcing the enforcement action, the Consumer Financial
Protection Bureau said call-center vendors used high-pressure and
deceptive practices to push consumers into purchasing products such
as payment protection and credit monitoring. In particular,
individuals with low credit scores or low credit limits were
pressured to accept these add-ons when they called to activate
Among the findings of the bureau investigation:
- Consumers were sometimes misled into believing the products
improve their credit score
or credit limit.
- Payment protection products were marketed to unemployed and
disabled individuals who are ineligible for the benefits.
- Some consumers were misled into believing they were enrolling
for a free product.
- In some cases, consumers were not told the products were
- Some call centers enrolled consumers in add-on products
without their consent.
As part of the enforcement action, Capital One must cease all
deceptive marketing practices as well as make full repayment, with
interest, to two million consumers. In addition to the roughly $140
million in refunds, the credit card company must pay a $25 million
penalty to the Consumer Financial Protection Bureau's Civil Penalty
Capital One responded to the announcement with its own
that stated the issues were caused by third-party vendors not
following Capital One's explicit instructions on product sales, but
that the company was still committed to righting the issue with its
Refunds to be issued by credit or check
Those eligible for a refund include anyone who was initially
enrolled in a product on or after August 1, 2010. In addition,
anyone who tried to cancel a product on or after August 1, 2010 but
was persuaded by a call center representative to remain enrolled
will also be eligible for a refund.
Refunds will include the price of the product and any associated
finance charges and over-the-limit fees as well as interest.
Individuals who had claims denied because they were ineligible at
the time of enrollment will also receive reimbursement for the
Individuals do not have to take any action to receive their
refund. Those with active Capital One accounts will have their
refund issued as a credit on their statement. Former cardholders
will be sent a check in the mail. The Consumer Financial Protection
Bureau expects refunds to be issued later this year.