CFPB Announces Enforcement Action Against Credit Card Issuer
On September 24, the CFPB announced that it resolved an investigation initiated by the FDIC and subsequently joined by the CFPB into telephone sales of certain ancillary or “add on” products marketed and sold by a major credit card issuer. The products related to (i) payment protection, (ii) credit monitoring, (iii) identity theft protection, and (iv) protection in the event of wallet loss. Pursuant to the Joint Consent Order released by the CFPB, the bank will pay a $14 million penalty and provide approximately $200 million in restitution to eligible consumers who purchased one or more ancillary products over a period of approximately four years. The order also calls for certain changes to the bank’s marketing and sales practices in connection with the products. During a press call to announce the consent order, CFPB Director Richard Cordray explained that the CFPB “expect[s] that more such actions will follow.” The CFPB is publishing the orders from its various actions on its administrative adjudication docket. Mr. Cordray also stated that “[i]n the meantime, [the CFPB is] signaling as clearly as [it] 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.” In July, the CFPB issued Bulletin 2012-06, which outlines the CFPB’s expectations for the institutions it supervises, and their vendors, with regard to offering ancillary products in compliance with federal consumer financial laws. BuckleySandler represented the bank in this joint CFPB-FDIC investigation and enforcement action.