CFPB: Financial Companies Charged Consumers for Services they Never Received
If approved, a consent order from the Consumer Financial Protection Bureau (CFPB) would compel two financial companies to pay almost $10 million in refunds and fines for selling credit card add-on benefits that they never provided.
Under the proposed consent order Affinion Group Holdings and its affiliated companies would pay about $6.8 million in refunds and a $1.9 million civil penalty. Intersections Inc. would pay about $55,000 in refunds and $1.2 million in civil penalties.
Both vendors of services like credit monitoring and identity theft protection, Affinion and Intersections partnered with banks to provide these products to credit card holders and other bank customers.
The CFPB's investigations revealed that Affinion and Intersections engaged in unfair practices related to the billing or administration of these products in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
The complaint alleges that between July 2010 and August 2012, Affinion enrolled consumers in add-on products that claimed to provide consumers with benefits including credit monitoring, credit report retrieval, or both. Consumers generally paid between $6.95 and $15.99 per month for these products, which were typically billed directly to their credit cards or deposit accounts.
The Bureau alleges, however, that Affinion or its partner banks billed full product fees to at least 73,000 accounts while failing to provide the full credit monitoring or credit report retrieval services promised, and failed to refund fees to those consumers.
During customer retention calls, the CFPB also alleges that Affinion frequently misled consumers about product benefits through inaccurate or incomplete retention phone call scripts, and statements and omissions by individual retention specialists.
Similarly, from 2009 through early 2013, Intersections marketed and sold add-on products to consumers, promising them access to their credit reports and a credit score, email or phone alerts when new credit accounts were opened, and access to a phone representative to respond to their credit report questions. Consumers generally paid between $8 and $13 per month for these products, which were typically billed directly to their credit cards.
The CFPB alleges consumers were charged fees even though Intersections could not provide the credit monitoring or other benefits for various reasons, including: failure to obtain a valid authorization from the consumer, fraud alerts on a consumer's credit file, and incomplete social security information, among others. In some cases, consumers paid for these services for several years without receiving the promised benefits.
The vast majority of the approximately 300,000 affected consumers have already received refunds, in part as a result of prior Bureau enforcement actions. The consent order will compel the company to pay the remaining $55,000 to those that haven't received refunds.
Along with refunding customers and paying the civil penalties, Affinion and Intersections would have to end their unfair and unlawful billing and retention practices.