Capital One Deceptive Marketing Practices

Washington, DC: Capital One customers who called to activate a new credit card, may have been routed to representatives who try to sell additional products such as "credit protection"or "identity monitoring." These services, or "add-on products,"are additional, optional services that will cost the customer money and are not mandatory. In some cases, the sales tactics may be high-pressure and confusing, and are considered deceptive marketing tactics.

In 2012, the Consumer Financial Protection Bureau (CFPB) announced its first public enforcement action against Capital One Bank (USA), N.A. This action resulted from a CFPB examination that identified deceptive marketing practices used by Capital One' 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.

According to information issued by the CFPB, consumers with low credit scores or low credit limits were offered these products by Capital One' 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' consent. Consumers were then automatically billed for the product and often had trouble cancelling the product when they called to do so.

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Last updated on Jan-28-13