If I were the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), or the Federal Reserve Board, I’d be a bit miffed right about now. I mean, these organizations have obviously engaged in lengthy investigations into deceptive marketing practices by Capital One, Discover, and American Express, yet in each instance the new kid on the block – the Consumer Financial Protection Bureau (CFPB) – came along at the last minute and stole their thunder like a goal-line back poaching a touchdown.
Nevertheless, you likely care more about the subjects of these investigations than whoever did the dirty work or got the credit. We’ve previously discussed how the OCC and CFPB teamed up to bust CapOne for lying to customers about the cost and benefit of certain account add-ons, which resulted in the bank having to pay $210 million in fines and consumer reparations. Well, as we all figured, such practices weren’t limited to a single issuer, and just a short while later it became time for Discover and American Express to pay up.
Discover has to give $200 million back to 3.5 million current and former customers who were either misled about or unknowingly signed up for payment/wallet protection, credit score tracking, and identity theft protection. Discover was basically caught red-handed giving call center operators scripts that falsely implied that these products and services were free or that consumers would be sent information about products before being required to pay.
Those wronged by these sneaky practices will automatically receive a statement credit if they are still Discover customers or a check in the mail if not. If you’ve been wronged in a similar manner by a different credit card company, don’t get too jealous quite yet – the penalties aren’t over.
“We continue to expect that more such actions will follow,” Cordray said in a conference call with reporters on Sept. 24. “In the meantime, we’re signaling as clearly as we can that other financial institutions should review their marketing practices to ensure that they are not deceiving or misleading consumers into purchasing financial products or services.”
Cordray was right. On October 1, the CFPB ordered American Express to repay $85 million to approximately 250,000 customers as a result of numerous violations of consumer protection laws. Amex was found to have misled consumers about the initial bonuses they would receive for signing up for certain credit cards, charging excessive late fees, discriminating against applications because of their age, failing to report consumer disputes to credit bureaus, and misleading consumers about the benefits of paying off old debt, presumably to reset the Statute of Limitations (SOL).
How to Avoid Issuer Impropriety
Hopefully, this rapid succession of enforcement will finally get the message through to issuers that these tactics won’t be tolerated, and if they don’t police themselves, they will get hit where it hurts the most – their wallets. However, we obviously can’t trust them to clear up such issues proactively as of yet, so it’s also a good idea to be aware of the best ways to avoid unknowingly shelling out money for unwanted products or services or being misled by customer service.
- Don’t sign up for anything over the phone: While you clearly don’t always have control over what you’re registered for, the fact that call center operators are intentionally misrepresenting their services means that you should never accept what they say at face value.
- Get it in writing: A person can easily lie to you, especially when paid on commission, but it’s much less likely that a bank will include misinformation on its printed literature or website. That’s why, when you’re interested in a particular product or service, you should first peruse the Web and, if this is not successful, call and explicitly ask to be mailed or directed to the information you’re looking for.
- Leave no doubt about what you’re looking for: If you find yourself on the phone with a credit card company representative and are simply looking for some information, explicitly state that that you do not want to sign up for anything at the present time.
- Carefully review your statement: The only way to determine if you’ve been registered for an add-on you don’t want is to review your monthly statements and investigate any suspicious charges or debits. Doing so on a monthly basis is the best practice, but pay particular attention to account activity following any customer service calls.
The combination of these preemptive measures and increased attention from federal regulations should provide sufficient protection to ensure that you won’t be lied to or charged without your knowledge and consent.