The Consumer Financial Protection Bureau has finally finished its first regulatory investigation. The investigation was conducted into credit card-related goods sold by distributors employed by Capital One, in an unlawful manner. The Consumer Financial Protection Bureau Capital One case has led to the bank spending more than $200 million in fines and restitution.

CFPB, Capital One resolve first enforcement by agency

The Consumer Financial Protection Bureau, despite its controversial beginnings and controversial appointment of a director, hasn’t really done much in the way of enforcement, besides proposing some rules and so forth, at least until now.

When the Consumer Financial Protection Bureau found that Capital One, a credit card issuer, was not very clear about who was selling what with its third-party distributors who were selling financial products to go with the cards. That was why the CFPB started the investigation and then the suit. The Wall Street Journal publicized that the bureau has finished enforcing its first motion against the business.

Poor target group

The bank also offers some additional services to go with having a Capital One charge card, according to ABC, which is sold through third-party distributors. Those services contain credit monitoring and payment protection, used if a person is injured or sick and cannot make a payment due to missing work. In that case a minimum payment is made on their behalf, a sort of insurance against missing a credit card payment.

If a customer called the call center to activate a card and had poor credit, it took at least 8 minutes to get through the call while listening to a lot of sales pitches from operators who would over exaggerate the service a ton. There was a ton of pressure in those phone calls to get the extra things. The typical consumer would only be on the phone for 2 minutes and did not have to listen to any sales pitches.

There were false promises from the operators, such as telling those without jobs that they could get a few payments from payment protection even though the customer would not really qualify. They would also promise that a credit rating would improve with the product.

Huge fines assessed

The probe concluded that Capital One, now part of ING, lost the ability to regulate what these distributors were selling and the way they were selling it to customers. As a result, Capital One has agreed to pay $210 million in fines. Of that, $25 million will go to the CFPB, a further $35 million will go the Office of the Comptroller of the Currency and $150 million will be paid in restitution to Capital One clients that had been deceived. The bank will even stop selling ancillary charge card products until it can ensure proper conduct.

Capital One dealt with a comparable case in England in 1997, according to ABC, which also require consumers to get paid out money. There will be 2.5 million corporations in the United States who will receive their money soon, according to USA Today. A Consumer Financial Protection Bureau investigation like this is being done with Discover Financial as well.

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