On July 16, 2012, the Consumer Financial Protection Bureau (CFPB) announced its first public enforcement action. The CFPB found that Capital One Bank (USA), N.A. violated sections 1031 and 1036 of the Consumer Financial Protection Act1 by engaging in deceptive marketing practices in connection with certain add-on products that Capital One offered to credit card holders. The CFPB and Capital One entered into a Stipulation and Consent Order requiring Capital One to: (1) pay $210 million in restitution, remediation and penalties; and (2) strengthen its internal and external controls to ensure compliance with the Consumer Financial Protection Act. The Capital One enforcement action provides a roadmap for what the consumer credit industry can expect from the CFPB with respect to compliance and what the CFPB expects from a company’s board in connection with the marketing of services for which the customers must pay an additional fee.
The CFPB’s Findings
When some customers called a third-party call center to activate their Capital One credit cards, they were routed to a credit card activation process that involved the solicitation of products marketed and sold by Capital One. One of the products provided the customers with credit monitoring services, and the other product provided customers with an opportunity to request the cancellation of their entire credit card balance up to the credit card limit in the event of death, unemployment, disability, or other life event.
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