Friday, July 20, 2012

Refunds from Capital One

The number of court executions recorded here by the sheriff's department has risen substantially during the financial crisis.  The plaintiffs in most of those cases are credit card companies and one of the most frequent names we see is Capital One.  That company's name came up in a different context recently when it entered into a consent decree with the nearly one-year old Consumer Financial Protection Bureau.

The CFPB brought an action against Capital One peddling credit card "add-ons" such as fraud monitoring and "payment protection" to consumers in a deceptive manner, sometimes leading customers to belief that paying for such services was a mandatory provision of holding such a credit card and at other times selling the services to people who could never collect on them.  One example was a service that would defer twelve monthly minimum payments in the event of unemployment or extreme illness.  The sale people for Cap One were selling this service to those who were already unemployed or disabled and who were, by definition, ineligible for such protection.  Cap One was happy to take there money.

In this consent decree, Capital One will refund $140 million to 2 million card holders and will pay an additional fine of $25 million to the government.  Card holders need not apply for the refund; it will come automatically.  To those still holding a Capital One card, it will come as a credit to the existing card and to those without a card, it will come in the form of a check.

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