Capital One, one of the nation’s biggest banks, will reimburse $150 million to more than two million customers for selling them credit card products they could not use or did not want, as the nation’s new consumer watchdog leveled its first enforcement action against the financial industry.
The Consumer Financial Protection Bureau on Wednesday hit Capital One with findings that a vendor working for the bank had pressured and deceived card holders into buying products presented as a way to protect them from identity theft and hardships like unemployment or disability.
The regulatory actions, totaling $210 million including fines to authorities, take aim at one of the financial industry’s growing profit centers and increasingly controversial practices. Several other banks, including Bank of America, JPMorgan Chase and HSBC, were sued in June by the Hawaii attorney general, accused of improperly selling similar so-called add-on products, which consumer advocates typically regard as costly and ineffective.
“We know these deceptive marketing tactics for credit card add-on products are not unique to a single institution,” said Richard Cordray, the director of the consumer bureau. “We expect announcements about other institutions as our ongoing work continues to unfold.”
Capital One — known for its catchy television ads that ask, “What’s in your wallet?” — did not admit to or deny any of the findings. While it said the wrongdoing had occurred at outside call centers that “did not always adhere to company sales scripts,” the bank’s president for credit cards, Ryan M. Schneider, acknowledged that the company was “accountable for the actions that vendors take on our behalf.”
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