|Some will rob you with a six-gun, some with a fountain pen.|
The new Consumer Financial Reform Bureau does. The agency just slapped Capitol One with a $25 million fine and ordered it to repay 2 million customers $140 million. According to the CFPB press release,
...CFPB ... identified deceptive marketing tactics used by Capital One’s vendors to pressure or mislead consumers into paying for “add-on products” such as payment protection and credit monitoring when they activated their credit cards.Here's what happened: Capital One customers with low credit ratings or low credit limits would call to activate their cards. The call center people would tell them to buy the "add-on" products because they'd improve their credit score (they wouldn't). Or that they had to buy the add-on (they didn't). Or they'd lie and say it was free (it wasn't). Or they'd offer "payment protection" in case of disability or unemployment -- when the customer was already disabled or unemployed and didn't qualify.
Sometimes the call centers would even enroll customers in the "add-on" program without their permission. And guess how easy it was for customers to get out of paying that charge when the bill came? (Not easy.)
So thanks to the CFPB, Capital One isn't allowed to do that any more. It has to pay back customers who bought (or got stuck with) the add-on product on or after Aug. 1, 2010. An independent auditor will decide if Capital One behaves itself.
The CFPB was created by the Dodd-Frank financial reform two years ago and headed by Teamster friend Richard Cordray, Ohio's former attorney general. Here's Cordray:
Today’s action puts $140 million back in the pockets of two million 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. We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.Despite all the crap you hear about regulation hurting the banks, a new poll shows that three out of four Americans want strong oversight of Wall Street. It showed two-thirds of voters support the CFPB and believe it's necessary.
The CFPB celebrates its first birthday on July 26. Mark your calendars.