Capital One, the nation's leading credit-card lender, is paying $210 million to resolve two regulatory cases.
The Consumer Financial Protection Bureau announced Wednesday that it would undertake action against Capital One (NYSE: COF) for ripping off two million customers in a credit card scam.
The nascent consumer watchdog, in its first public enforcement action against the financial services industry, slammed a fine of $25 million on the U.S. bank and ordered a refund of about $140 million to its customers for engaging in deceptive marketing practices to mislead or bully customers into paying for add-ons, like credit protection and credit monitoring products, when they activiated their credit cards. These tactics violate federal law, the consumer agency said.
"Today's action puts $140 million back into the pockets of 2 million Capital One customers who were pressured or misled into buying credit card products they didn't understand, didn't want, or in some cases, couldn't even use," CFPB Director Richard Cordray said in a statement. "We are putting companies on notice that these deceptive practices are against the law and will not be tolerated."
The Office of the Comptroller of the Currency, the nation's banking regulator, is separately sanctioning Capital One for spurious billing practices it has engaged in for nearly a decade. The OCC is slapping a civil penalty of $35 million against the bank and ordering a reimbursement of $150 million -- an amount that includes the $140 million refund demanded by the CFPB to compensate customers for their lost money.
The case against Capital One is the latest setback for a financial industry that is reeling under pressures from federal limits on debit-card and credit-card fees.
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