On July 1, 2015, the Consumer Financial Protection Bureau ("CFPB") filed complaints and proposed consent orders against two credit card add-on product vendors – Affinion Group Holdings, Inc. (and its affiliated companies) and Intersections Inc. – for allegedly unfairly charging consumers for credit card add-on benefits they did not receive, which is in violation of sections 1031 and 1036 of the Consumer Financial Protection Act of 2010 ("CFPA"), 12 U.S.C. §§ 5531(a), 5536(a)(1). If approved by the courts, the consent orders provide that Affinion will pay approximately $6.8 million in monetary relief to eligible consumers and $1.9 million in civil money penalties, while Intersections will pay approximately $55,000 in monetary relief to eligible consumers and $1.2 million in civil money penalties. Both consent orders also provide that the add-on vendors will end any unfair billing practices and submit to compliance monitoring by the CFPB.
While the CFPB's allegations against the add-on vendors are slightly different given the distinctions in the vendors' specific products and practices, the complaints generally allege that the vendors enrolled consumers in add-on products that claimed to provide consumers with various credit monitoring services. The add-on vendors gained access to these consumers through marketing and service arrangements with banks, and the charges for these products, ranging from $6.95 to $15.99 a month, were assessed to the consumers' credit cards or deposit accounts. According to the complaints, however, the add-on vendors failed to provide the full range of services or benefits promised by the products. In addition, the CFPB alleged that Affinion frequently misled consumers about product benefits and values – through inaccurate retention phone call scripts, and statements and omissions by individual retention specialists – in order to avoid cancellations. According to the filings, Affinion's alleged conduct affected approximately 73,000 accounts, while Intersections's alleged conduct affected approximately 300,000 customers.
The CFPB, acting under its authority conferred by the Dodd-Frank Act, entered into the consent orders, which would require the add-on vendors to reimburse consumers who have not already received refunds for unfair billing practices, end unfair billing practices, pay civil penalties, submit to compliance reviews and, with respect to Affinion, end any unlawful retention practices.
The CFPB's actions against Affinion and Intersections indicate that the agency is scrutinizing the relationships between add-on vendors and financial institutions to ensure that consumers receive the benefits promised by such products, that consumers are not misled about the products themselves, and that vendors are responsive to any consumer demand to cancel the products.
A copy of the CFPB's complaint filed against Affinion can be
found at:
http://files.consumerfinance.gov/f/201507_cfpb_complaint_affinion.pdf
A copy of the proposed consent order filed today in the Affinion
action can be found at:
http://files.consumerfinance.gov/f/201507_cfpb_stipulated-final-judgment-and-order_affinion.pdf
A copy of the CFPB's complaint filed against Intersections
can be found at:
http://files.consumerfinance.gov/f/201507_cfpb_complaint-INTX.pdf
A copy of the proposed consent order filed today in the
Intersections action can be found at:
http://files.consumerfinance.gov/f/201507_cfpb_stipulated-consent-order-INTX.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
