The Consumer Financial Protection Bureau ordered GE Capital Retail Bank and its subsidiary, CareCredit, to refund $34.1 million to approximately 1.2 million customers of a deferred-interest healthcare credit card. CareCredit is accused of enrolling people in its card through deceptive tactics.
The card is primarily sold by doctors, dentists and other medical providers as a payment option for patients. The CFPB said there are more than 175,000 providers enrolled in the program to offer CareCredit’s card.
The CFPB objected to the card’s marketing, which featured a “no interest if paid in full” promotion. Under the card’s agreement, CareCredit assesses a nearly 27 percent interest rate on a consumer’s balance throughout a promotional period, typically six months to two years. If any balance remains after that period ends, the consumer must pay the entire accrued interest.
Exact terms of the deferral were often poorly explained, and customers often did not receive required written disclosures, the CFPB said. “Our investigation showed that many patients thought they were signing up for an interest-free loan or … an in-house payment plan,” CFPB Director Richard Cordray said in a press call.
“We found that many patients did not receive paper copies of the credit card agreement and instead relied on staff at health-care offices to explain it to them. Some staff had received little or no training from CareCredit,” Cordray said. “Some providers themselves admitted that they were confused about the actual consequences of the deferred-interest terms.”
The CFPB said that CareCredit is responsible for inadequately training staff at medical offices that sell the card. As part of the consent order, CareCredit must improve training of personnel who sell its product.
The consent order also requires the company to call most customers to explain the agreement, as well as properly disclosing terms of the card up front. In addition, it must now directly enroll consumers with transactions of more than $1,000 through a representative at CareCredit and not at a medical office.
The consent order also calls for GE Capital and CareCredit to maintain a $34.1 million reimbursement fund. Claims filed against CareCredit seeking reimbursement will be reviewed by an independent adjudicator.
“Medical debt is already a big problem for many Americans. Poor credit card transparency should not be making the problem even worse,” Cordray said.