Capital One Bank must pay $210 million in customer refunds and penalties for pressuring and misleading credit card customers into buying payment protection plans and credit monitoring services.
The sum includes $150 million in refunds and $60 in penalties, according to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. The refunds to 2.5 million customers, who had to endure call center sales pitches while waiting to activate new cards, should be issued later this year, the federal agencies said.
“These marketing calls were inconsistent with the explicit instructions we provided to agents for how these products should be sold,” Ryan Schneider, president of Capital One’s card business, said in a statement. He said the credit card company fully cooperated with regulators.
Capital One, however, isn’t the only credit card company using deceptive marketing tactics to lure customers into the protection plans, and announcements targeting other card issuers are expected, the agencies said.
Regulators said consumers with low credit scores were often targeted with the pitches. When they called to activate new cards, the customers were transferred to call centers where live operators would spend eight minutes trying to get them to sign up for the protections. For most customers the activation process lasted only 2 minutes.
Some were signed up for the extra fees without their permission and had trouble canceling the services when bills arrived, regulators said.
“We are putting companies on notice that these deceptive practices are against the law and will not be tolerated,” CFPB director Richard Cordray said.