Paying the Pied Piper

Capital One earns the distinction of the first bank to be charged by Obama’s Consumer Financial Protection Bureau:

The bank’s phone-sales operators told customers that services like payment protection and credit monitoring were free or mandatory or offered more benefits than they did, federal officials said. The hard selling targeted people with poor credit, they said.

Capital One will pay up to $150 million to 2.5 million customers, $25 million to the CFPB and $35 million to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations.

“Consumers deserve to be treated fairly by their credit card issuer,” CFPB director Richard Cordray told reporters.

Stop the presses:

He said the problems are not isolated at Capital One and said he expects announcements about other companies…

Class warfare:

Customers were transferred to the call centers when they phoned to activate their credit cards, the order said. For most customers, that meant a two-minute process without any ads for extra products. But people with subprime cards or lower credit limits endured eight-minute pitches by live operators while they were waiting for the card to be activated…

For example, operators sold “payment protection” that would cancel some credit card debt if the customer became sick or unemployed. But the buyers sometimes were already sick or jobless, so they could never collect on a claim.

AP insinuates that the deception was motivated by the meta-scumbaggery in which banks think that they are somebody special:

Banks are pushing the extra services as they scramble to replace profits lost because of recent limits on fees they can charge and how cards can be marketed. Industry officials argue that the limits are encouraging banks to come up with increasingly obscure, difficult-to-detect ways of charging customers.

Finally, CFPB enforcement chief Kent Markus establishes his place among the ranks of those with a sense of common decency:

Markus said the agency wants to “make it more costly to violate the law than to comply with it.”

“We want to discourage the harmful practices from occurring to begin with,” he said.


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