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Pepper Hamilton Client Alert: The Consumer Financial Protection Bureau Celebrates First Birthday By Flexing Its Enforcement Muscles: Settlement Costs Capital One $210 Million

Financial institutions have spent a year anticipating and predicting when the Consumer Financial Protection Bureau (CFPB) would put its broad enforcement powers to use.

The anticipation ended on July 18, 2012, when the CFPB announced its first enforcement action with the entry of a consent order against Capitol One Bank. See, Stipulation and Consent Order, available at

The subject of the consent order was Capital One’s marketing practices for credit card add-on products, such as payment protection and credit monitoring. Capitol One used third-party agents to market these products. The CFPB alleged that Capital One’s third-party agents used deceptive marketing tactics to pressure or mislead consumers to pay for these add-on products and that Capitol One had failed to provide proper oversight.

In a press release, Capitol One stated that its “third-party vendors did not always adhere to company sales scripts and sales policies for Payment Protection and Credit Monitoring products, and the bank did not adequately monitor their activities.” As part of its settlement with the CFPB, Capital One will refund $140 million to customers and pay a $25 million penalty to the CFPB.

In addition, Capitol One’s prudential regulator, the Office of the Comptroller of the Currency (OCC), assessed a $35 million dollar civil penalty and ordered a $10 million refund, in addition to that required by the CPFB. In total, the enforcement action cost Capital One $210 million, ten times more than the largest settlement ever obtained by the Federal Trade Commission.

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Stephen G. Harvey
Leah J. Greenberg |