Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

Washington
Capital One fines prompt CFPB card guidance
WASHINGTON (7/19/12)--Credit unions should be aware of compliance guidance posted yesterday by the Consumer Financial Protection Bureau (CFPB) that addresses marketing practices associated with certain "add-on" features related to credit cards.

The guidance was, at least in part, prompted by the CFPB's announcement of its first public enforcement order, which requires Capital One Bank (U.S.A.), N.A., to refund approximately $140 million to two million customers and pay an additional $25 million penalty because of alleged deceptive marketing tactics used by Capital One's vendors.

CFPB said it determined that Capital One vendors pressured or mislead consumers into paying for "add-on products," such as payment protection and credit monitoring, when they activated their credit cards.

CFPB said the compliance bulletin puts other financial institutions on notice that the bureau "will not tolerate deceptive marketing practices, and institutions will be held responsible for the actions of their third-party vendors."

The bulletin addresses Regulation B (Equal Credit Opportunity Act) and Regulation Z (Truth in Lending Act) provisions, as they relate to credit card practices. While only credit unions with more than $10 billion in assets fall directly under CFPB supervision, on matters involving interpretive guidance on consumer protection laws and regulations under the CFPB's purview the National Credit Union Administration will defer to the CFPB.

The guidance sets forth both steps to be taken to ensure vendors market and sell credit card add-on products in a manner that limits the potential for statutory or regulatory violations and related consumer harm, as well as a list of features that should be included in compliance management by financial institutions that offer credit card add-on products.  (See resource link to read guidance.)

The CFPB enforcement action Tuesday was taken in coordination with the Office of the Comptroller of the Currency.  Between the agencies actions, Capital One was assessed $60 million in total civil money penalty with $150 million in total restitution to cardholders. 

Use the resource link to read the examiners' findings regarding Capital One opt-in marketing practices.
Other Resources

RSS





print
News Now LiveWire
More branch shutterings by @Citi: 4th-largest bank to close 10% of #Chicago area branches HT @CrainsChicago http://t.co/2vAvgucLY5
49 minutes ago
56% struggle with subprime credit scores says @cfed survey HT @washingtonpost http://t.co/RHmMvuhNtw
1 hour ago
How to use social media for crisis communications Feb. 10 webinar from @SBAgov, @AgilityRecovery http://t.co/d16t8RHr7n
2 hours ago
#Consumersentiment highest in 11 years @Umich January survey http://t.co/64ORm6b0Fc
6 hours ago
#creditunions teach #college students how to handle the plastic http://t.co/SYy24PSQmn
6 hours ago