(Image Source: CNN Money )

BY MATTHEW PICHT

ANCHOR CHRISTINA HARTMAN


The Consumer Financial Protection Bureau, or CFPB, is fining Capital One bank $210 million dollars for deceptive marketing practices related to its credit card business. WGAL has the details:

“The Consumer Financial Protection Bureau says Capital One call center employees told customers the products were free, misled them about the benefits, and allowed people to think that the services were required for cardholders.”

According to the CFPB , Capital One marketed these superfluous card services to customers with low credit scores. These customers were directed to third-party call centers, which used “high-pressure tactics” to sell the customer useless or misrepresented services.

This is the first public settlement the CFPB has made. It is a major victory for the fledgling agency, which has been subject to intense scrutiny since its inception two years ago. CNN explains, the institution was founded in order to protect consumers from harmful or fraudulent financial products.

“Basically, the Bureau’s mission is to help individuals make better decisions when it comes to using consumer financial products, such as credit cards, home mortgages, and school loans. Although it also gets into such areas as credit reports, debt collections, and foreclosures.”

CPFB director Richard Cordray says this settlement puts other financial companies engaged in deceptive practices “on notice”. Bloomberg’s Su Keenan says, lenders beware – this might be just the beginning.

ANCHOR: “That begs the question, ‘who’s next to get busted’, right?
KEENAN: “It does indeed, you know, the CFPB and the FDIC have subpoenaed Discover Financial Services, amid a probe into that lender’s marketing of fee-based products.”


Capital One is not confirming or denying wrongdoing in this settlement, placing the blame for fraudulent marketing on the shoulders of third-party call centers. The New York Times has Capital One’s remarks.

“... Capital One said the wrongdoing occurred at outside call centers that ‘did not always adhere to company sales scripts.’ But the bank’s president of credit cards, Ryan M. Schneider, also acknowledged that the company was ‘accountable for the actions that vendors take on our behalf.’”

Of the $210 million penalty, approximately $140 million dollars will be reserved to compensate over 2 million people affected by Capital One’s marketing.