When a credit card company or bank wants to sell you things like “Credit Card Security” or “Debt Security,” be wary. You can bet you’ll get less than what you pay for. The federal government’s action requiring GE Capital to pay $225 million, to settle charges of illegal marketing and discrimination, is the latest reminder.
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) found a pattern of deceptive marketing and outright discrimination by GE Capital, which provides credit card services for major retailers. The company changed its name to Synchrony Bank on June 2, 2014.
HERE’S WHAT HAPPENED
Telemarketers for GE Capital called card holders and offered five different debt cancellation add-on products: “Card Security,” “Account Security,” “Account Security Plus,” “Debt Security,” and “Debt Security Plus.” But they didn’t mention that they were selling these credit card add-ons and if you signed up, you’d have to pay a fee.
They told consumers that these credit card add-ons were free. But this was not completely true. It was only free if you paid off your balance before GE Capital issued a monthly statement.
Telemarketers also failed to tell some consumers that they didn’t qualify for the add-ons because they were retired or disabled, and consequently they wouldn’t be eligible for cancellation benefits.
In addition, they made it seem like it was a great benefit that you had to rush and sign up for immediately.
As a result of investigators’ findings, GE Capital will pay $56 million to approximately 638,000 consumers who became victims of these deceptive marketing practices.
GE Capital will also pay an additional $169 million to about 108,000 Spanish-speaking borrowers, in Puerto Rico and elsewhere, who couldn’t take advantage of legitimate debt relief programs because the company discriminated against them. They were not offered plans to manage their debt if they said they preferred to have a conversation in Spanish.
CFPB Director Richard Cordray said, “We will continue to take action against marketing tactics that trick consumers into buying credit card products they do not want or cannot use. Consumers also deserve to be treated fairly no matter where they live or what language they speak.”
HOW YOU GET YOUR REFUND
If you’re a GE Capital customer who became a victim of these practices, you don’t have to do anything. You’ll receive a credit to your account or a check.
FIX CREDIT REPORT INFORMATION
GE Capital will also work with credit bureaus to fix any negative information that might have resulted because of the purchase of the add-ons.