The Consumer Financial Protection Bureau has ordered Capital One to refund $140 million to approximately two million cardholders after the card issuer deceived customers into purchasing certain add-on services, like payment protection plans and credit monitoring.
Current and former Capital One customers who initially enrolled in one of the add-on services on or after August 1, 2010 or who unsuccessfully tried to cancel after August 1, 2010 will receive a refund of all fees plus interest. Current cardholders will receive the refund as a credit to their credit card account. Former cardholders will receive a check in the mail.
Watch Out for Phishing Scams
The CFPB warns of scams related to the refund. Scammers may ask for personal information or tell you to send money to receive your refund. The refund is automatic. If you're entitled to a refund, you won't have to do anything to receive funds.
Always remember not to give out personal information on a call you didn't initiate to a number you've confirmed belong to your card issuer. Never give out personal information via email or a website you landed on from an email click. Instead, log in to your account by typing the company's URL directly into your internet browser.
What Capital One Did Wrong
Capital One isn't being penalized for simply selling or suggesting payment protection plans and credit monitoring services. It's the way the company's customer service reps sold services that got them in trouble with CFPB.
According to the CFPB, Capital One misled customers about the benefits of the services, failed to inform customers that the services were optional, failed to inform certain consumers they were ineligible to receive benefits of the services, misled to think the services were free, and enrolled without consent.
In addition, Capital One made it difficult and impossible for some cardholders to cancel services.
In addition to the $140 million penalty, Capital One is required to pay a $25 million penalty to the CFPB. The card issuer is also not allowed to market these products until they submit an acceptable compliance plan to the Bureau.