CFPB Takes Action Against Companies for Unfair Billing of Credit Card Add-On Products and Services

Credit Cards  •  Dodd-Frank  •  UDAP/UDAAP

The Consumer Financial Protection Bureau (“CFPB”) took action against two credit card vendors, entering into proposed consent orders regarding the companies’ offerings of allegedly unlawful add-on products.  Credit card companies offer consumers “add-on” services, such as credit monitoring or identity theft protection for a monthly or annual membership fee.

Following an investigation, the CFPB found that the vendors violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank Act) prohibition on Unfair, Deceptive and Abusive Acts or practices (UDAAP) through their offering of add-on products.  One of the vendors allegedly failed to provide full credit monitoring or credit report retrieval, despite consumers paying monthly fees of $6.95 to $15.95 a month for these services. The company also allegedly misled consumers about “product benefits and value to avoid consumers cancelling their services.”  The company agreed to pay $6.8 million in monetary relief for eligible consumers who had not yet received refunds, and $1.9 million in civil money penalties.  The company also agreed to end unfair billing practices, and end unlawful retention practices.

 

The other vendor also offered credit monitoring and identity theft products to consumers directly, promising access to credit reports, a credit score, and access to phone representatives to answer credit report questions.  For these services, consumers paid $8 to $13 a month. The vendor charged 300,000 consumers, knowing they were not receiving the benefits for which they paid.  Many of these consumers have already received refunds. The vendor agreed to pay $55,000 in refunds, and $1.2 million in civil money penalties, and to end unfair billing practices.

This is the first time the CFPB brought actions directly against vendors who have provided these products and services.

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