Capital One to pay $210 million for tricking customers
WASHINGTON (AP) - Capital One Bank will pay $210 million to settle federal charges that it tricked credit card customers into buying costly add-on services like payment protection and credit monitoring.
Most of the money will go directly to refund customers who were led to believe the services were free or mandatory or offered more benefits than they did, officials said Wednesday.
The order against Capital One is the first enforcement action by the Consumer Financial Protection Bureau, which was set up a year ago to protect consumers from excessive or hidden fees and other financial threats.
Under its agreement with the CFPB, Capital One will pay about $150 million to 2.5 million customers and an additional $25 million penalty. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations.
The refunds will go to customers who bought add-on card services between August 2010 and January 2012. They will receive the full amount of fees they paid and any other related costs.
CFPB officials said they observed heavy-handed tactics by Capital One call center workers as they monitored the bank's operations. The CFPB can oversee the biggest banks and certain other companies by stationing employees at their headquarters.
Capital One blamed a third-party vendor and said the vendor had violated its instructions. Capital One apologized to its customers.
CFPB, which was created under the Obama administration's financial overhaul law, is the first federal regulator focused on protecting consumers, rather than on ensuring that banks are stable and profitable.
Its officials referred the issue to the agency's enforcement division.
Capital One settled the matter without admitting or denying the allegations laid out by its regulators.
Most of the money will go directly to refund customers who were led to believe the services were free or mandatory or offered more benefits than they did, officials said Wednesday.
The order against Capital One is the first enforcement action by the Consumer Financial Protection Bureau, which was set up a year ago to protect consumers from excessive or hidden fees and other financial threats.
Under its agreement with the CFPB, Capital One will pay about $150 million to 2.5 million customers and an additional $25 million penalty. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations.
The refunds will go to customers who bought add-on card services between August 2010 and January 2012. They will receive the full amount of fees they paid and any other related costs.
CFPB officials said they observed heavy-handed tactics by Capital One call center workers as they monitored the bank's operations. The CFPB can oversee the biggest banks and certain other companies by stationing employees at their headquarters.
Capital One blamed a third-party vendor and said the vendor had violated its instructions. Capital One apologized to its customers.
CFPB, which was created under the Obama administration's financial overhaul law, is the first federal regulator focused on protecting consumers, rather than on ensuring that banks are stable and profitable.
Its officials referred the issue to the agency's enforcement division.
Capital One settled the matter without admitting or denying the allegations laid out by its regulators.
Future customers will p[ay for this judgement through increased fees and rates. The consumer still loses.
They should take that $210mil, and put all their customers in a lottery, allowing 210 people to each get $1mil. Â
I just sent KOMO an email about this crappy system...anyone who would like to see the far better one restored...please do the same...
Change takes time.Â
 @Lookitsme No, this is much more advanced, don't be afraid of changes
Yeah...slow, kludgy, no editing, lousy layout....it's much more advanced...
 @Lookitsme At least it loads more than half the time, unlike IntenseDebate......
@ lookitsme: Yes, it totally, completely, absolutely positive;ly SUCKS! Not only that, ALL the previous comments on existing stories have been wiped out. You cannot "TD" anything - you have to wither "like" it, comment on it or not do anything. So much for open discussion & free exchange of ideas. Guess they think everyone should be on FACEBOOK - something I flat out refuse to do.
 @LocalLady We looked at Facebook commenting, but we did not want to require users to login with a facebook account. We make that option available, but everyone can still create an account just for commenting that is not tied to their real name.
 @LocalLady What's the point in TD-ing? You either like a comment or move on
Wait...since corporations are now people, why isn't the company going to do some hard time for fraud?!?
In related news...is it me or does this new commenting system REALLY suck?
Have had my cap 1 card for at least 15 years. Don't recall them ever trying to urge me to sign up for any extra services. They mail those stupid checks once in a while, but that's about it.Â
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Am disappointed that my 9.9 fixed forever didn't last forever. Used to be able to get cash advances for 9.9 back then too.Â
I for one am glad they have to pay. Here is they way they got you. You get their card and have to activate it by calling a toll free number you get connected to a person who activates your card and then starts the pressure. Since these cards are typically given to people with past credit problems or new credit they talk you into the payment protection. It only costs a few dollars per 100 dollar balance each month for the peace of mind. They will lie. I asked if anything happened to my husband who is the major earner would it cover and they said yes. Husband has surgery misses 6 months of work. Does it pay? NO. Why, because his name is not on the account as a co-borrower only authorized user. I explained his name is on the bank account they take payments from and they pretty much said yeah but it doesn't matter. Give me the $60 buck one person mentioned. It will pay for a few months. Trying to cancel is another nightmare. I've been trying to cancel for a couple years.
@taxpro It happens on almost every card I get and like you say it usually comes when you call to activate the card. It is easy enough to say no and hang up though, I hate the people who use the excuse that they talked me into it, even if that is true then you still agreed to it and could have cancelled.
Wow. Those 2.5 million customers will get a whopping $60 each.
One of the advangates of the old comment stream was the ability to edit and delete. This new one stinks...
@Wormwood No thumbs down either. Seems to be scored on how many likes you have and doesn't consider how many dislike what you say.
@Wormwood I don't like it either but KOMO does so its here to stay.
We need to request editing. The LiveFyre web site says they don't allow editing because it would "damage the context of the commenting", BUT KOMO (like all other web news) often edits the story itself without any notification and "damages" the context of the commenting. A time limit on editing (ie, 30 minutes) would be OK, since that could cover typos. Â
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Anyone that agrees should give feedback on the commenting system using the link at the bottom, not as more comments on this news topic thread.
 @georgef Hi. We hope to have the editing functionality restored soon.
Cost of doing business for a bank. They are running so many tricky scams, losing on a few does not really matter to them.  Note that A) deflect to a 3rd party vendor scapegoat and B) "settle the matter withouth admitting or denying the allegations".   Basically they get a free pass by writing a check. If there were people employed by the bank that engineered this, they will never face criminal fraud charges since there is no prosecutatorial will to persue it once the check clears.
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Someday we may stand up an demand that fraud at this scale needs to be punished by more than some dollars, that people need to be held personally liable for orchestrating it.
Just to add to my point... http://www.oftwominds.com/blogjuly12/white-collar-crime7-12.html
HSBC sent me something similar about a class action lawsuit.....I would have gotten all of $15. What's the point? Besides, I clearly understood the terms when I got payment protection on my credit cards and have used the service when I was unemployed to great effect. I guess some people felt cheated though and the courts are all about how you feel, and not fact, these days.....
Will this affect Alec Baldwin's hypocrisy account, now overdrawn?
They'll pay for their trickeration!
@Walker I'd love to see the trickeration you speak of. Every offer I have had started with a verbal offer, followed by the printed material mailed to you, and it all comes with a trial period that you can cancel. They may be taking advantage of people who don't understand these programs, then don't bother to read what they signed up for, and then don't bother to cancel, nice trick.