Yesterday, the CFPB announced a $225 million settlement of two major credit card enforcement matters with Synchrony Bank, formerly known as GE Capital Retail Bank. First, the “Add-On Matter” targets alleged deceptive marketing of credit card add-on products in violation of the deceptive prong of Dodd-Frank’s UDAAP prohibition. Second, the “Offer Exclusion Matter” addresses alleged discrimination against Hispanics in connection with debt relief offers to credit card customers, which excluded certain Spanish-speaking customers and all customers in Puerto Rico. The settlement underscores the Bureau’s ongoing focus on UDAAP violations, particularly with respect to add-on products and potentially “deceptive” marketing by employees and third parties. Digging beneath the $225 million headline, the agreements also highlight the upsides of self-reporting done right – not only did the Bank not pay any civil monetary penalty (CMP) for its potentially serious violations in the Offer Exclusion Matter, but it appears to be paying nothing more than it had already offered to proactively pay in remediation.

THE ADD-ON MATTER -

During an examination, the CFPB identified alleged UDAAP violations in connection with the Bank’s credit card add-on products. The Bank offered five debt cancellation add-on products, which “it promoted as providing debt cancellation of a certain percentage of the consumer’s balance in the event of certain hardships.” The Bureau does not assert that the products themselves were unfair, deceptive, or abusive. Instead, it alleges that the Bank’s “telemarketers” misrepresented the products in four main ways...