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Capital One faces massive fine for duping its customers into paying for worthless credit monitoring

by Neal O'Farrell on July 18th, 2012

In another blow to the dishonest peddling of questionable credit monitoring and identity protection services, today the Consumer Financial Protection Bureau (CFPB) announced a massive fine of $210 million against Capital One, for allegedly tricking consumers into paying for things like credit monitoring services without their consent.

$150 million will go to reimburse an estimated 2 million consumers who were affected by this scam, with the remaining going into a Civil Penalty Fund to help future victims.

It looks like the CFPB is not done either, and may have many other financial services companies in its sights, companies that engaged in practices to trick customers into subscribing for worthless services.

In an interview with Reuters, Ed Mierzwinski, consumer program director of advocacy group U.S. PIRG, said “Consumers should know that credit protection and monitoring are the worst add-on products you can buy.” According to Reuters, Travis Plunkett, legislative director of the Consumer Federation of America, is no kinder, referring to these services as “junk products.

Capital One seemed to be blaming its vendors and identity protection partners. According to an investigation by the Wall Street Journal, the settlement ordered that 500,000 customers who were signed up for identity protection through Affinion, makers of the PrivacyGuard monitoring service, and Intersections, makers of the IdentityGuard product, also be reimbursed

It never cease to amaze me that an industry that is supposed be based on absolute trust – inviting consumers to trust their identities to these vendors – deliberately and without apology breach that trust as part of their business model.

From → In the Headlines