Capital One’s Non-Compliant Marketing Strategies and The Consumer Financial Protection Bureau (CFPB)

It Pays to Be Compliant

What can you do with $210 million? Yes, it is a lot of money and there are probably 210 million ways you imagine spending it. Are regulatory fees and shelling out refunds on that list? Probably not.

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But that’s exactly what the Consumer Financial Protection Bureau is making Capital One Banking do for its marketing practices. The CFPB alleges Capital One tricked its credit card customers into purchasing add-on services.

“The bank’s phone-sales operators told customers that services like payment protection and credit monitoring were free or mandatory or offered more benefits than they did, federal officials said. The hard selling targeted people with poor credit, they said” according to the Associated Press.

Telephone operators with Credit One were cited for performing practices that misled the consumer. The list of accusations is a costly lesson in how NOT to treat valuable customers:

• Deviated from the scripts to the extent that the product was misrepresented.
• Failed to clearly explain to the customer the product, its terms and eligibility.
• Terms were stated in a manner that was considered unethical.
• Ineffective compliance monitoring, service provider management and quality assurance from Capital One.
• Failed to properly explain the credit protection product was an optional service.
• Failed to received proper consent from the customer in many cases for the premium to be added to their account.

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This is the first major action carried out by the Consumer Financial Protection Bureau, set up three years ago to protect consumers from hidden and financial threats.

While there may be those who wish to debate the theory of caveat emptor, the reality is the concept of active protection of the consumer by the government is here to stay and smart companies must be compliant – for the right reasons.

While this is a textbook case as to why it pays to be compliant, it does not mean you have to abandon the direct marketing channel. But you should work with companies who understand the importance of compliance and build the necessary processes and checks to keep rogue behavior out of the system. In addition, make sure your products bring real value for their cost.

At GCS, we take our customers’ safety and satisfaction seriously. It’s how we have always done business on behalf of our clients. Through the use of proper training, judicious recording, quality monitoring, self-regulation and outside auditing, we provide a high level of comfort for our clients in all the contact channels we provide for both inbound and outbound engagement.

GCS is SRO certified by PACE (Professional Association for Customer Engagement) and we have our own team dedicated to insuring our sales and marketing practices are compliant with not only all government regulatory laws and standards, but also with the best practices of marketing and customer service.

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