Capital One Must Pay Back the 2.5M Customers It Ripped Off

Mega bank also was slapped with hefty penalties

   

Capital One Must Pay Back the 2.5M Customers It Ripped Off

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency on Wednesday ordered Capital One (NYSE:COF) to make restitution to the 2.5 million customers deceived by the company’s marketing practices.

The CFPB has required that the bank refund approximately $140 million to about two million customers and pay an additional $25 million penalty. The organization’s action stems from an investigation that deemed marketing tactics used by Capital One’s vendors as deceptive with the intention to “pressure or mislead consumers into paying for ‘add-on products’ such as payment protection and credit monitoring when they activated their credit cards.”

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In a separate order, the OCC is requiring the bank to pay $150 million to customers and slapped a $35 million civil money penalty against the company.

“This amount includes the same $140 million refund to be paid to the approximately two million customers harmed by the deceptive marketing practices identified by the CFPB’s examiners,” the CFPB said in a press release.

The $35 million penalty imposed by the OCC is for the bank’s failure to “develop and implement a comprehensive and effective enterprise risk-management program to detect and prevent unfair and deceptive practices, and the duration of and failure to correct those practices,” the organization said in its own release.

Additionally, because of the the OCC order, the bank must stop the sales and marketing of any debt suspension product, debt cancellation product or credit and identity monitoring products.

Capital One also reported dismal earnings Thursday; still, COF shares were up more than 4% in afternoon trading.


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/capitol-one-must-pay-back-the-2-5m-customers-it-ripped-off/.

©2014 InvestorPlace Media, LLC

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