In the first public enforcement action since its inception, the Consumer Financial Protection Bureau has ordered Capital One Bank to pay millions in refunds and penalties for pressuring customers to buy costly add-on services for their credit cards.
Capital One will refund approximately $140 million to two million customers and pay an additional $25 million penalty. According to the CFPB, Capital One’s call center vendors pressured and/or misled consumers into paying for products, such as payment protection and credit card monitoring when they called to activate their new cards.
“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 Director Richard Cordray. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
Capital One, in a statement, identified the call centers as third-party vendors, but admitted to a lack of call center oversight.
"We are accountable for the actions that vendors take on our behalf," said Ryan Schneider, President of Capital One's Card business. "These marketing calls were inconsistent with the explicit instructions we provided to agents for how these products should be sold. We apologize to those customers who were impacted and we are committed to making it right."
Capital One said it has fully cooperated with the CFPB investigation.
The CFPB, which opened a year ago, was created under the Obama administration's financial overhaul law to protect consumers from excessive or hidden fees and other financial threats.
Consumers who are eligible for a refund and have an open account will be automatically credited. For consumers who are eligible but no longer have a Capital One credit card, a check will be mailed instead. No action is required. Refunds will be issued later this year.