Capital One to Pay $210 Million for Misleading Millions of Customers

Capital One Bank, which is headquartered in McLean, has agreed to pay $210 million in consumer refunds and fines after federal officials said the company "pressured and misled" two million customers into buying additional products when they opened their credit card accounts, according to news reports Wednesday.

The credit card company issued a statement Wednesday that, in part, said: "Customers will begin receiving their refunds later this year. In addition, Capital One will pay $25 million in Civil Money Penalties to the Consumer Financial Proection Bureau (CFPB) and $35 million in Civil Money Penalties to the Office of the Comptroller of the Currency (OCC). Capital One is strengthening its internal quality control processes and its monitoring of its vendors. Capital One has fully cooperated with both the OCC and the CFPB in addressing these issues."

The following is a round-up of what various media outlets had to say about the financial scandal:

• CNN Money reported that the new Consumer Financial Protection Bureau found that Capital One, "pressured and misled consumers into paying for 'add-on products' like payment protection and credit monitoring when they activated their credit cards."
• Bloomberg Businessweek reported: "It was the first public enforcement case brought by the Consumer Financial Protection Bureau, established by the Dodd- Frank Act to increase oversight of consumer financial products." Bloomberg also reported that the consumer bureau and the "Office of the Comptroller of the Currency, the bank’s primary regulator, said Capital One agreed to provide between $140 million and $150 million in restitution to 2 million customers" pay millions of dollars in penalites. 
• Reuters reported that the "new Consumer Bureau said it unearthed the activities through an examination of the bank." 
• CNN Money reported that Capital One leads the pack on the Consumer Bureau's new online database devoted to cataloging consumer complaints against credit card companies, which was launched last month.

Highlights of the enforcement action against Capital One include:

1. The Consumer Bureau said employees, who worked for a third party, "misled customers by saying add-on products would improve their credit scores or falsely telling them that the products were free," Reuters said.
2. In a statement, the president of Capital One's credit card business, Ryan Schneider, said, “We are accountable for the actions that vendors take on our behalf,” The Washington Post first reported. “These marketing calls were inconsistent with the explicit instructions we provided to agents for how these products should be sold. We apologize to those customers who were impacted and we are committed to making it right."
3. The Post reported that Capital One has "agreed to discontinue the sales and marketing of any debt suspension product, debt cancellation product, credit and identity monitoring products as a part of the agreement with the government."
4. "Capital One gets over half of its revenue from credit cards and acquired access to about $80 billion in deposits and seven million new customers from ING," Reuters reported.

Richard Fairbank, the founder, chairman and chief executive officer of Capital One Financial Corp., is a resident of McLean. The company's headquarters is located on Dolley Madison Boulevard, just north of Tysons Corner.

Related Story: Capital One Plans Layoffs