Today the Consumer Financial Protection Bureau, or CFPB, announced an action against two “credit card add-on product vendors” — sellers of services such as identity theft protection or credit monitoring — for billing customers for add-on services they never actually received.
The two companies – Intersections, Inc. and Affinion Group Holdings, Inc. (plus various Affinion affiliates) – must pay almost $9.6 million combined in consumer refunds and penalties. The CFPB said that under the proposed consent orders, Affinion would pay $6.8 million to cover refunds for eligible consumers plus an additional $1.9 million in civil penalties, and Intersections would pay $55,000 for refunds and $1.2 million in penalties.
Filed fees without providing service
According to the CFPB, Affinion, whose affiliated companies include Trilegiant Corporation; Watchguard Registration Services Inc.; Global Protection Solutions, LLC.; and three Affinion variants (Affinion Group, Inc.; Affinion Group, LLC.; and Affinion Benefits Group, LLC.), “advertised, sold, and delivered identity theft and credit monitoring products to consumers by establishing marketing and service agreements with banks.”
Specifically, according to the CFPB complaint, from July 2010 through August 2012 Affinion enrolled customers in programs promising benefits including credit monitoring and/or credit report retrieval, and charged customers between $6.95 to $15.99 per month, usually billed directly to their credit cards or withdrawn directly from their bank accounts.
Yet the CFPB alleges that “Affinion or its partner banks billed full product fees to at least 73,000 accounts while failing to provide the full credit monitoring or credit report retrieval services promised, and failed to refund fees to those consumers. 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.”
Billed and misled consumers
The results hurt consumers in two ways: CFPB says they were “billed for product benefits they did not receive,” and also “misled about product benefits and value to avoid cancellation.”
The CFPB made similar allegations against Intersections, which allegedly sold similar add-on services from 2009 through early 2013, charging between $8 and $13 per month. However, most former Intersections customers have already received refunds “in part as a result of prior Bureau enforcement actions,” but the Bureau estimates that “approximately $55,000 in consumer harm is still owed.”