Just recently, Capital One has been found guilty of using high-pressure on people to get them to pay extra charges when applying for credit cards. The agency that investigated Capital One is the newly created Consumer Financial Protection Bureau (CFPB), which was founded in 2010 by President Obama. As a result of the action by the CFPB, many people will be getting a Capital One settlement amount.
Going after Capital One demonstrates the power of the new agency to investigate banks and similar agencies, such as credit card companies. According to the Huffington Post, the CFPB did not actually bring Capital One to trial, but the agency has the power to act and fine agencies in the wrong – even without a formal trial.
The problem with Capital One is that it had used deceptive practices through their call centers to get people to think that they needed some add-ons when obtaining it. They also targeted people getting sub-prime cards and subjected them to an eight-minute sales pitch, but people with regular or good credit only needed about two minutes without ads to activate their cards. In a report by Forbes, their actions were described like this: “Capital One customers who were pressured or misled into buying credit card products they didn’t understand, didn’t want, or in some cases, couldn’t even use,” by the Director of the CFPB – Richard Cordray.
As a result of the investigation by the CFPB, Capital One has been fined a total of $210 million for their wrong actions. Overall, it was discovered that about two million people were unfairly charged fees for services they either did not want or could not even use, because they were pressured by the call center representatives. About $150 million will go to them. Another $25 million will go as a fine to the CFPB, and another $35 million will go to the Offices of the Comptroller of the Currency (OCC) – an agency that oversees banks.
This strong action by the CFPB shows other banks and credit card companies that they may be next, and hopefully, this should help consumers to get better deals and to be treated better. It also indicates that consumers may be able to expect less pressure from the big credit card companies, when they activate their cards.
Consumers also should take note that they need to be aware of possible add-ons when they apply for a credit card, says Beth Pinsker Gladstone at Reuters. According to the article, when it comes to add-ons, credit protection and credit monitoring are about the worst products you can buy. Being informed is the best protection against this kind of pressure.
Possibly one of the best things that may come out of this, besides the company reform of the way they deal with their customers, is that this action reveals that there is hope when a big company does wrong against the little guy. Reporting a wrong action is encouraged, and perhaps some of the big companies that have been mistreating their customers may be up next to give account.
According to FoxBusiness, the CFPB is looking to gather up complaints so that they can follow up on them. They would like to hear about problems with student loans, other credit card company complaints, and credit report errors.
This article was first published on http://moneyprime.com.