Capital One Bank will pay $210 million to settle federal charges that it tricked credit card customers into buying costly add-on services like payment protection and credit monitoring.Capital One says it was the fault of a third party vendor, the usual fall guy in these situations. But just what did Capital One do to have a near-quarter-billion-dollar whip cracked on it? The Consumer Financial Protection Bureau, which successfully brought this action, explains:
Most of the money will go directly to refund customers who were led to believe the services were free or mandatory or offered more benefits than they did, officials said Wednesday.
The marketing of these products was misleading and deceptive in at least four ways. First, many consumers were wrongly encouraged to believe they had to purchase these products to activate their cards. Second, some consumers were either deceived into thinking these products were free or were simply enrolled without their full consent and automatically billed. Third, some consumers were wrongly led to believe that these products would improve their credit score or help them build good credit. Fourth, some consumers were sold the product even though they were disabled or unemployed and thereby ineligible for some of the benefits being touted. Furthermore, once customers became aware of these problems or no longer wanted to pay for the product, they were given the runaround or further misled as a means of keeping them enrolled. Capital One’s compliance mechanisms failed to prevent, identify, and correct the practices.Note the period of time for which the refunds are being made available and the fines are being charged. August 2010 to January 2012. Did Capital One suddenly start its deceptive practices to con its customers in sharp August 2010? One would think not. So something happened in 2010 that allowed them to be held accountable for their deception. What was it... what was it... Oh, right. A Democratic Congress passed and President Obama signed into law the most significant banking re-regulations since the FDR.
Funny thing. In 2010 alone, Capital One spent $1,675,000 just in lobbying expenses. I wonder what they were doing. Couldn't be that they were trying to put a stop to the law that is now costing them hundreds of millions of dollars for deceiving their customers, could it? Nah. Banks would never do that.
Wanna know something else that's funny?
That surely couldn't be because damn nearly every Republican voted against banking regulations, could it? Nah, banks would never try to buy legislators. No way.
If anyone is still wondering what the difference is between Democrats and Republicans, let it begin at this. Two million customers will get back an average of $70 a piece because they were deceived by a financial institution. And nearly every Republican voted against that at every turn. It is only possible because of President Obama and because he had a Congress that in some instances could overcome Republican obstructionism.
Let this also be a message to the Left. If you want bigger changes, if you want more regulations and enforcement against Wall Street, we not only need to overwhelmingly re-elect President Obama but give him a Congress that he can work with.