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Capital One settles deceptive practices charges

The Maryland based Baltimore Business Journal is reporting that Capital One, one of the nation's bank holding companies, has agreed to pay $210 million after allegedly being involved in deceptive practices. The company was accused of failing to take action when its third party affiliates misled customers in order convince them to purchase additional products.

According to the settlement reached with the Consumer Financial Protection Bureau and the U.S. Office of the Comptroller of the Currency, Capital One has agreed to pay $25 million and $35 million in fines to the CFPB and the OCC, respectively. An additional $150 million is to be used to offer refunds to Capital One customers who bought add-on products, such as credit monitoring services or payment protection plans, from the company's third-party vendors between August 2010 and January 2012.

"We are accountable for the actions that vendors take on our behalf," explained an executive with Capital One. He added the vendors took actions that were "inconsistent" with the company's policies regarding the sale of add-on products.

The third-party affiliates reportedly incorrectly told customers that purchasing the products in question would secure them a higher credit limit or help boost their credit score. Some vendors even told customers that these optional add-ons were required, with others convincing customers who were ineligible to take advantage of the products to purchase them anyway. Several customers said they were billed for add-on products without their approval.

Capital One immediately ceased phone-based sales of add-on products upon hearing news of the deceptive practices and began to identify affected customers. Customers are expected to begin receiving compensation later in 2012.

Maryland businesses accused of engaging in deceptive tactics can be targeted by expensive claims and lawsuits, ultimately having to pay millions of dollars to settle their cases. In such instances, representation from a qualified attorney specializing in business litigation is crucial.

Source: Baltimore Business Journal, "Capital One to pay $210M to settle deceptive practices probe," Bryant Ruiz Switzky, July 18, 2012

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