CFPB Slams Two Credit Card Add-On Companies for Unfair Billing Practices
Today, the Consumer Financial Protection Bureau has fined two companies, Intersections, Inc. and Affinion Group Holdings, Inc, for selling credit card add-on products to consumers, but never providing the services to the buyers.
Many credit card companies work through third-party vendors to offer “add-on” services such as identity theft protection or credit monitoring to cardholders for a monthly fee. The CFPB alleges that these two companies sold these add-on products but failed to provide consumers with the services they purchased.
The complaint against Affinion Group Holdings, Inc. alleges the company sold these add-on products between July 2010 and August 2012 to at least 73,000 customers. Consumers were charged between $6.95 and $15.99 per month to their credit cards or directly to their deposit accounts.
The CFPB claims Intersections, Inc. sold products from 2009 through early 2013 to over 300,000 customers. They were promised 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. They paid between $8 and $13 per month for these services, charges that were usually billed directly to their credit cards.
The CFPB fined each company and required them to provide refunds to affected customers.
Affinion must refund nearly $6.8 million to eligible consumers who have not yet received their money back, as well as $1.9 million in civil money penalties. Intersections has already paid back money to a majority of affected customers, but still owes approximately $55,000 in refunds, in addition to $1.2 million in civil money penalties.
“Consumers have every right to get what they pay for,” said CFPB Director Richard Cordray in a statement. “But we are still finding that thousands of consumers paid for add-on benefits they were promised but never received. We continue to address unlawful conduct in this space and are signaling to other financial institutions and their service providers that their marketing and billing practices must be fair to consumers.”