CFPB Takes Action Against Credit Card Add-On Product Vendors

The CFPB has taken action against two more companies for their unfair bill practices as it relates to credit card add-on product and services, the agency announced earlier this week (July 1).

According to the CFPB, Affinion Group Holdings, Inc., Affinion’s affiliated companies, and Intersections Inc. were charging consumers for credit reporting and ID theft protection services that they never received. The order from the CFPB will result in Affinion paying $6.8 million to eligible customers, along with $1.9 million in civil penalties. Intersections will pay approximately $55,000 to eligible customers, along with $1.2 million in civil penalties.

“Consumers have every right to get what they pay for,” said CFPB Director Richard Cordray. “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.”

This action from this case stems from the often unfair practices of credit card companies the entice their clients to choose “add-on” services, like credit monitoring of ID theft protection for a specific fee. In this instance, Affinion and Intersections — both vendors of the add-on products — worked with banks to offer the products to credit card holders and bank customers. But through a CFPB investigation, it was discovered that the companies “engaged in unfair practices related to the billing or administration of these products in violation” of the Dodd-Frank Act.

According to the CFPB’s statement on the action: “Today’s two actions build on several of the Bureau’s past actions against banks to address illegal practices in the marketing or administration of add-on products. This is the first time the Bureau has brought actions directly against the companies that provided these products and services.”

Affinion was accused of having customers pay somewhere between $6.95 and $15.99 a month for add-on products that were said to help with credit monitoring, credit report retrieval, or both, but those services were never actually provided.

“During customer retention calls, the CFPB also alleges that Affinion frequently misled consumers about product benefits through inaccurate or incomplete retention phone call scripts, and statements, and omissions by individual retention specialists,” CFPB wrote in its statement in the ruling. Consumers were also allegedly misled about benefits of the product in order for the consumers to want to keep the service.

As for Intersections, the CFPB claims that they company sold add-on products about access to their credit reports and a credit score, email, or phone alerts when new credit accounts were opened — for $8-$13 per month — but they weren’t fully receiving those benefits. The CFPB claims that Intersections “billed or instructed the banks to bill approximately 300,000 consumers who signed up for their products knowing they were not receiving all the benefits for which they paid.”

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