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CFPB Requires Credit Card Issuers to Refund Money to Consumers

Posted By Miranda Marquit On 01/09/2013 @ 7:15 am In Credit | 3 Comments

The Consumer Financial Protection Bureau [3] (CFPB) is a relatively new government agency, but it is already taking names and busting heads. One of the more recent decisions made by the CFPB is to require some credit card issuers to refund money to consumers.

The CFPB points out that some of the marketing practices used by Capital One, Discover, and American Express deceived customers in terms of what they could expect from certain products. In some cases, consumers were misled into buying products or services. The result is that a total of $435 million in refunds is on the way to some customers.

What Did the Credit Issuers Do?

The refunds are coming as a result of different problems from different issuers. The violations include:

  • American Express: Subsidiaries, in some cases, charged late fees that exceeded the legal limits. Additionally, some AmEx subsidiaries reportedly promised money bonuses that didn’t actually exist. Amount: $85 million.
  • Capital One: Third-party vendors pressured customers into buying extra products and services, using misleading information, when they opened new accounts. On top of that there were irregularities related to payment protection and credit monitoring products that cardholders enrolled in between August 2010 and January 2012. Amount: $150 million.
  • Discover: Most of the damages to customers from Discover involve credit protection purchases made over the phone between December 2007 and August 2011. Amount: $200 million.

In many cases, those pushing various products or services deceived consumers about what they were getting, how it was being paid for, or whether or not they really needed it. If you enrolled in these types of products during the time periods indicated, you can contact your credit card issuer for information about your refund.

Automatic Refund

For the most part, the refund is coming in the form of a statement credit. American Express has already started paying out as required, and Capital One promises to start issuing refunds in Quarter 1 of 2013. Discover should be issuing refunds soon. For most customers, the amount is likely to be less than $100. Your balance will be reduced by the requisite amount, or you will have a credit on your statement to count against future balances. If you are no longer a customer, the credit card issuers are supposed to issue you a check.

You shouldn’t have to do anything to receive the refund; it’s supposed to be automatic. However, realize that not every customer will receive the refund. It’s only meant for those who actually purchased the products under investigation, and from those who purchased them from representatives engaging in deceptive practices. If you think that you are entitled to a refund, and the credit card issuer says that you aren’t, you can contact the CFPB to see if you have a case.

Watch Out Before Buying

Anytime your credit card issuer offers you a product or service, you should be wary. Most consumers don’t need credit protection, and it’s possible to get credit monitoring services from other sources. Think carefully before you agree to purchase these products, and make sure you understand the terms and conditions.

(Photo: Images_Of_Money [4])

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