Richard Cordray, the director of the Consumer Financial Protection Bureau, announced on Wednesday that the watchdog agency taking enforcement action for the first time against Capital One for deceptive marketing strategies.
The CFPB alleges that Capital One tricked consumers with low credit scores and credit limits into buying add-on services and products, such as credit monitoring, by insisting that the purchase was mandatory, lying about the product or saying there was no cost.
“These marketing calls were inconsistent with the explicit instructions we provided to agents for how these products should be sold,” Ryan Schneider, the president of Capital One’s card business, said, according to Huffington Post. “We apologize to those customers who were impacted and we are committed to making it right.”
Capital One agreed to pay a $210 million settlement, including a full refund totaling $140 million to consumers who were affected by the deceptive practices used by the institution.
Under the settlement, Capital One will also pay a $25 million penalty to the CFPB and a $35 million penalty to the Office of the Comptroller of the Currency, Huffington Post reports.
“We know these deceptive marketing tactics for credit card add-on products are not unique to a single institution,” Cordray said, adding that the agency will also issue a compliance bulletin and consumer advisories. “The compliance bulletin puts all financial institutions on notice about these prohibited practices and reinforces that they must make sure their service providers are complying with the law. We expect announcements about other institutions as our ongoing work continues to unfold. Regardless, the best time for all institutions to be reviewing and ensuring their practices in this area is right now. Consumers deserve to be treated fairly by their credit card issuers, and that is our objective.”