In all, Capital One, Discover and American Express must pay $471.1 million in customer refunds and government fines, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, following an investigation begun last year by the Federal Deposit Insurance Corporation and later joined by the Consumer Financial Protection Bureau. Refunds go to 6 million credit cardholders as part of three settlements between credit card issuers and the CFPB.
Refunds: Card issuers are paying for misleading consumers into applying for credit cards or buying add-on services such as "payment protection, credit score tracking, identity theft protection and 'wallet protection.' " Cardholders will automatically receive refunds as account credits if their accounts are still open, or as refund checks in the mail if their accounts are closed. No consumer action is required. Refunds will arrive by March 15.
Penalty fees: In addition to consumer refunds the three issuers will pay a total of $66.5 million in penalties. The CFPB will receive $46.1 million of that penalty money - $7 million from Discover, $25 million from Capital One and $14.1 million from American Express - to be deposited into CFPB's Civil Penalty Fund ( tulsaworld.com/CFPBpenaltyfund).
American Express: Oct. 1, CFPB reported Amex will reimburse 250,000 cardholders $85 million: Consumers misled into paying old debts they thought would be reported to the credit bureaus will be reimbursed those amount plus interest. Amex will pay $300 to customers promised that amount of money for taking Blue Sky credit cards. Consumers paying illegal late fees will be reimbursed, by March 13, plus interest. Consumers promised debts would be forgiven but later denied new cards when debts were not forgiven will receive $100 and pre-approved offers for cards with terms approved by CFPB and FDIC ( tulsaworld.com/CFPBAE).
Discover: Sept. 24, CFPB reported the company will pay $200 million to 3.5 million consumers misled into buying add-on products Dec. 1, 2007, through Aug. 31, 2011. Some were enrolled without their consent. Restitution goes to consumers who were misled by deceptive telemarketing and sales tactics that persuaded them to pay for credit card add-ons such as payment protection, credit score tracking, identity theft protection and "wallet protection." Customers will receive restitution based on dates of purchase and length of add-on ownership. Payment is at least 90 days' fees. Two million consumers will receive refunds of all fees paid ( tulsaworld.com/CFPBDisc).
Capital One: July 18, CFPB reported the company will pay $140 million in complete payment plus interest to 2 million consumers misled into paying for add-ons on or after Aug. 1, 2010. This also applies to those who tried to cancel products during that time but were persuaded to keep products by customer service reps and will pay claims denied for ineligibility at enrollment due to unemployment and disability ( tulsaworld.com/CFPBCapi).
Original Print Headline: Credit card issuers pay for misleading customers
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