Archives for July 2012

Consumer Protection Watchdog Announces Action Against Capital One

Press Release: Jul 18 2012

CFPB probe into Capital One credit card marketing results in $140 million consumer refund

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) announced its first public enforcement action with an order requiring Capital One Bank (U.S.A.), N.A. to refund approximately $140 million to two million customers and pay an additional $25 million penalty. This action results from a CFPB examination that identified deceptive marketing tactics used by Capital One’s vendors to pressure or mislead consumers into paying for “add-on products” such as payment protection and credit monitoring when they activated their credit cards.

“Today’s action puts $140 million back in the pockets of two 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,” said CFPB Director Richard Cordray. “We are putting companies on notice that these deceptive practices are against the law and will not be tolerated.”

Through the supervision process, CFPB’s examiners discovered Capital One’s call-center vendors engaged in deceptive tactics to sell the company’s credit card add-on products. These products included “payment protection,” which allows consumers to request that the bank cancel up to 12 months of minimum payments – roughly one percent of their credit card balance – if they encounter certain life events like unemployment and temporary disability. It also provides debt forgiveness in the event of death or permanent disability. Another product was “credit monitoring,” with services such as identity-theft protection, access to “credit education specialists,” and, in some cases, daily monitoring and notification.

Consumers with low credit scores or low credit limits were offered these products by Capital One’s call-center vendors when they called to have their new credit cards activated. As part of the high-pressure tactics Capital One representatives used to sell these add-on products, consumers were:

  • Misled about the benefits of the products: Consumers were sometimes led to believe that the product would improve their credit scores and help them increase the credit limit on their Capital One credit card.
  • Deceived about the nature of the products: Consumers were not always told that buying the products was optional. In other cases, consumers were wrongly told they were required to purchase the product in order to receive full information about it, but that they could cancel the product if they were not satisfied. Many of these consumers later had difficulty canceling when they called to do so.
  • Misled about eligibility:  Although most of the payment protection benefits kicked in when consumers became disabled or lost a job, some call center representatives marketed and sold the product to ineligible unemployed and disabled consumers. Despite paying the full fees, they could not get all the benefits of payment protection; some later filed claims that were denied because their “loss” (e.g. loss of job or onset of disability) occurred prior to enrollment.
  • Misinformed about cost of the products:  Consumers were sometimes led to believe that they would be enrolling in a free product rather than making a purchase.
  • Enrolled without their consent:   Some call center vendors processed the add-on product purchases without the consumer’s consent. Consumers were then automatically billed for the product and often had trouble cancelling the product when they called to do so.

Enforcement Action
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to issue Consent Orders and take action against institutions engaging in unfair, deceptive, or abusive practices. To ensure that all affected consumers are repaid and that consumers are no longer subject to these misleading and high-pressure tactics, Capital One has agreed to:

  1. End deceptive marketing: Capital One has ceased all marketing of these products, and will not resume doing so until Capital One submits a compliance plan, acceptable to the Bureau, which helps ensure these unlawful acts do not occur in the future.
  2. Complete repayment, plus interest, to two million consumers:  Capital One will pay approximately $140 million to all of the estimated two million consumers who either initially enrolled in a product on or after August 1, 2010, or who tried to cancel a product on or after August 1, 2010, but were persuaded to keep the product after speaking with a call center representative. In addition to the amount paid for the product, cardmembers will receive a refund of the associated finance charges, any over-the-limit fees resulting from the charge for the product, and interest.
  3. Pay claims denied based on ineligibility at enrollment:  For any of these eligible consumers whose payment protection claims were previously denied because their loss occurred prior to enrollment (because of unemployment, disability, etc.), Capital One will pay their claims as if they had been eligible, if that amount is greater than the refund for that consumer.
  4. Convenient repayment for consumers:  If the consumers are still Capital One customers, they will receive a credit to their accounts. If they are no longer a Capital One credit card holder, they will receive a check in the mail. Consumers are not required to take any action to receive their credit or check.
  5. Independent audit:  Compliance with the terms of this agreement will be assured through the work of an independent auditor, who will determine if Capital One has complied with the CFPB’s Consent Order.
  6. $25 million penalty:  Capital One will make a $25 million penalty payment to the CFPB’s Civil Penalty Fund.

Today’s action is being taken in coordination with the Office of the Comptroller of the Currency (OCC), which is separately ordering restitution of approximately $150 million from Capital One. This amount includes the same $140 million refund to be paid to the approximately two million customers harmed by the deceptive marketing practices identified by the CFPB’s examiners. The OCC’s order also includes separate restitution for additional consumers harmed by unfair billing practices taking place between May 2002 and June 2011 in violation of Section 5 of the Federal Trade Commission (FTC) Act. For the combined activity, the OCC is assessing a $35 million civil money penalty against Capital One.

In conjunction with today’s enforcement action, the Bureau is releasing two Consumer Advisories. One advisory is intended to make Capital One customers aware of today’s action and the other serves as a general warning to consumers who may encounter such deceptive practices.

Complaints received by the CFPB indicate – and the Bureau’s supervisory experience confirms – that other consumers have been misled by the marketing and sales practices associated with credit card add-on products. To further protect consumers, the Bureau is issuing a compliance bulletin that puts other institutions on notice that the CFPB will not tolerate deceptive marketing practices, and institutions will be held responsible for the actions of their third-party vendors. Companies engaging in deceptive practices will be expected to refund fees paid by consumers and, particularly where practices are widespread, pay an appropriate penalty.

The full text of the CFPB’s Consent Order

A factsheet on the Consent Order.

Find out how Capital One will handle refunds.

Couple Accused of Abusing 80 Year Old Woman

As reported by WMUR:

A pair of Ossipee residents were arrested and accused of abusing an 80-year-old woman Monday.

Darin Brown, 43, and his wife, Sharon Giordano, 38, were accused of hiding Brown’s mother and abusing her.

The victim had been reported missing from Massachusetts. On Monday morning, police searched Brown’s Ossipee home and found his mother. Authorities said the woman showed signs of abuse and neglect, and was immediately hospitalized.

Read More on the WMUR website.

RSA 161-F:46 requires any person that has a reason to believe that an elderly incapacitated adult has been subjected to physical abuse, neglect, or exploitation or is living in hazardous conditions to notify the Department of Health and Human Services or their local law enforcement agency.

Any person (other than the alleged perpetrator) who makes a report of an alleged incident of abuse, neglect or exploitation in good faith shall have immunity from any criminal or civil liability.

To make a report, contact the Bureau of Elderly and Adult Services at 1-800-949-0470. Calls are confidential.  If it is an emergency, dial 9-1-1.
 
 
by Patrick Doheny

 

 

Beware of Smishing!

Smishing is when a scam artist pretends to be a lottery business on your cell phone.   They say you are a winner and ask for your bank information. The calls are computerized and are just calling numbers at random, which is how they get your cellphone number. Watch this video by the Better Business Bureau for more information.

 

 

If you have been “SMISHED” or otherwise scammed, the Lawyer Referral Service of the New Hampshire Bar Association can refer you to an attorney who may be able to assist you with sorting out the financial mess created by the scam artists. Call 603-229-0002 or request an online referral.

Campus Debit Cards May Carry Hidden Fees

According to a report by the United States Public Interest Research Group (USPIRG)  many banks are taking advantage of students who need campus debit cards to access their financial aid.  They may appear to be an easy low-cost solution to handling finances while in school, but many of these cards carry excessive hidden fees.

“Campus debit cards are wolves in sheep’s clothing,” Rich Williams, one of the co-authors of the USPIRG report, said in a recent press release,  “Students think they can access their dollars freely, but instead their aid is being eaten up in fees.”

Although campus debit cards are not required to access a student’s financial aid, many banks market their product directly on colleges’ financial aid websites, often creating the perception of being the only option.

Debit cards have received less federal oversight. And, according to a study, by the United States Public Interest Research Group Education Fund, an advocacy organization, nearly 900 colleges and universities have card relationships with banks or other financial institutions, some of which manage student aid disbursements by turning student IDs into debit cards. Some schools save money by outsourcing administrative costs. Others receive payments from the banks.

Read the entire article by Jeff Ousley at Veteransunited.com

 

 

Veterans and the ADA: A Guide for Employers

Each year, thousands of military personnel stationed around the world leave active duty and return to jobs they held before entering the service, or begin the search for new jobs. Recent veterans report high rates of service-connected disabilities (i.e., disabilities that were incurred in, or aggravated during, military service).[1] About twenty-five percent of recent veterans report having a service-connected disability, as compared to about thirteen percent of all veterans.[2] Common injuries incurred by these veterans include missing limbs, burns, spinal cord injuries, post traumatic stress disorder (PTSD), hearing loss, traumatic brain injuries, and other impairments.

There are several federal laws that provide important protections for veterans with disabilities who are looking for jobs or are already in the workplace. Two of those laws — Title I of the Americans with Disabilities Act (ADA) and the Uniformed Services Employment and Reemployment Rights Act (USERRA) – protect veterans from employment discrimination. Title I of the ADA, which is enforced by the U.S. Equal Employment Opportunity Commission (EEOC), prohibits private and state and local government employers with 15 or more employees from discriminating against individuals on the basis of disability.[3] USERRA has requirements for reemploying veterans with and without service-connected disabilities and is enforced by the U. S. Department of Labor (DOL).

This guide describes how the ADA applies to recruiting, hiring, and accommodating veterans with disabilities, and briefly explains how protections for veterans with disabilities differ under USERRA and the ADA. The guide also provides information on laws and regulations that employers may find helpful if they want to make recruiting and hiring veterans with disabilities a priority.

Read the entire guide from the US Equal Employment Opportunity Commission (EEOC).

Are you a veteran who feels your employer is not complying with the ADA?  The Lawyer Referral Service of the New Hampshire Bar Association can help with a referral to a competent  attorney experienced with handling ADA issues in employment law.  Call 603-229-0002 or request an online referral.