Capital One, the fifth largest bank in the country, said Wednesday it reached an agreement with regulators to pay $210 million to resolve charges that it misled and pressured customers into purchasing unnecessary products.
The McLean bank has agreed to refund $150 million to 2.5 million consumers enrolled in debt cancellation as well as credit and identity monitoring products on or after Aug. 1, 2010.
As a part of the agreement, Capital One will pay a $35 million fine to its banking regulator, the Office of the Comptroller of the Currency. It will also hand over $25 million to the Consumer Financial Protection Bureau to settle an enforcement order tied to the alleged actions.
“We are accountable for the actions that vendors take on our behalf,” said Ryan Schneider, president of Capital One’s card business, in a statement. “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.”
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.
The bank acknowledges that its third-party vendors did not always “adhere to company sales scripts and sales policies”and “the bank did not adequately monitor their activities.”
Speaking about the enforcement action, CFPB director Richard Cordray said, “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”
The settlement is the first enforcement action taken by the Bureau, created two years ago to rein in on abusive behavior by financial institutions.