Banks and non-banks have paid an aggregate $101.5 million in penalties and $435 million in restitutions to consumers since the Consumer Financial Protection Bureau’s inception in July 2011, according the Bureau’s Supervisory Highlights: Fall 2012 report released Oct. 31. The CFPB reports 5.75 million consumers received restitution and 1.4 million receiving relief.
Of the $435 million in restitution, the majority came from three major enforcement actions. The first took place in July, a CFPB probe into Capital One Bank’s credit card operations resulted in a $140 million refund for 2 million of the bank’s customers and an additional penalty of $25 million to the CFPB. The CFPB coordinated with the Office of the Comptroller of the Currency, which also collected a $35 million penalty. The bank was penalized after the CFPB discovered a third-party partner of Capital One used deceptive tactics to convince consumers to buy add-on products like debt forgiveness, identity-theft protection and access to credit education specialists.
In September, the Bureau ordered Discover Bank to refund approximately $200 million to more than 3.5 million consumers. The bank also paid a $14 million penalty, the U.S. Treasury and the CFPB split the penalty, each collected $7 million. In this case, Discover used deceptive telemarketing practices to sell a two-year payment deferral product, unlimited access to credit reports, a credit cards cancellation service and a daily credit monitoring product. The CFPB determined the bank had misled consumers about the cost of the products, enrolled consumers without their consent and withheld information about eligibility requirements for certain benefits.
In October, the CFPB required American Express to refund an estimated $85 million to approximately 250,000 customers for violating a number of consumer regulations ranging from deceptive marketing to discrimination. American Express and its subsidiaries paid a combined $27.5 million in penalties. American Express and its three subsidiaries – American Express Centurion Bank, a state charted bank; American Express Bank, FSB, a nationally-chartered savings association; and American Express Travel Related Services, the parent bank holding company of the two banks – paid $14.1 million to the CFPB. The FDIC collected $3.9 million from American Express Centurion Bank. The Board of Governors of the Federal Reserve System collected $9 million and the OCC collected $500,000 from American Express Bank.
A unique feature of the American Express enforcement action brings the CFPB closer to home for community bankers. Regulators that supervise community banks − the FDIC and Utah Department of Financial Institutions – discovered the illegal activities. They then transferred the investigation to the CFPB, Federal Reserve and OCC.