CFPB Orders Bank to Refund Customers $225M
The CFPB ordered GE Capital Retail Bank to pay $225 million to relieve consumers the agency said had been subject to the bank’s deceptive credit card marketing. The bureau said the settlement represented the largest federal government credit card settlement in history.
The Draper, Utah, bank is a state-chartered industrial bank subsidiary of GE Capital Corporation and changed its name June 2 to Synchrony Bank. For its part, the bank said it had reported the violatiions to the agency and it had already remediated some of the losses.
The CFPB, which worked in conjunction with the U.S. Department of Justice, demanded the bank return $56 million to consumers the agencies said had been injured by the bank’s deceptive marketing. The order demanded $169 million returned to 108,000 borrowers who the agency said had been excluded from debt relief offers solely because of their perceived national origin.
“Today’s action will provide $225 million in relief to GE Capital credit card customers who were harmed by deceptive marketing or discrimination,” said CFPB Director Richard Cordray. “We will continue to take action against marketing tactics that trick consumers into buying credit card products they do not want or cannot use. Consumers also deserve to be treated fairly no matter where they live or what language they speak."
The Agency’s order charged the bank sold debt cancellation insurance consumers could add to their card accounts by saying they would not have to pay for the additional protection if they paid off the balance at the end of each cycle. In fact, the customer could only avoid the fee if they did not use the card or paid off the balance before the bank issued its monthly billing statements.
CFPB also charged the bank had sold the insurance to retired or disabled people, which their retired or disabled status would prevent them from using. In addition, the agency charged the bank convinced other consumers to purchase the protections without clearly informing consumers they were making a purchase and told still others the products were being sold on a “limited one time offer” when they were not.
In addition to paying the money, the bank was ordered to end deceptive marketing, illegal discrimination in card offerings, repay consumers simply without requiring additional steps and notify the credit reporting bureaus to delete any negative information which might have been added to their accounts because the debt relief programs had been closed to them.