WASHINGTON — The Consumer Financial Protection Bureau issued its first enforcement action Wednesday, ordering Capital One Bank N.A. to pay $165 million for what the agency described as deceptive marketing tactics related to various credit card products.
The CFPB will require Capital One, which entered into a consent order with the agency, to refund approximately $140 million to customers and pay a $25 million penalty, the agency said in a press release. On top of the funds required by the CFPB, the Office of the Comptroller of the Currency ordered Capital One to pay an additional $10 million in restitution to customers plus $35 million in penalties, bringing the bank's total bill to $210 million.
The actions are the result of a CFPB examination that, according to the agency, found that Capital One's call-center vendors used deceptive tactics to sell add-on products to the bank's credit card customers.
The CFPB alleged that Capital One consumers were misled about the nature of the products, as well as their costs and potential benefits. In some cases, according to the agency, customers were also enrolled without their consent.
Capital One stated in a press release that its third-party vendors did not always follow the company's sales scripts and policies for payment protection and credit monitoring products, and the bank did not monitor the vendors' activities adequately.
"We are accountable for the actions that vendors take on our behalf," Ryan Schneider, president of Capital One's card business, said in a statement. "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."
Under the consent order that Capital One signed, the bank agreed to stop all marketing of the products in question, and to delay resuming marketing until it submits an acceptable compliance plan to the CFPB.
Read the full story at AmericanBanker.com