With a little arm-twisting from the federal Office of the Comptroller of the Currency (OCC), Capital One has agreed to refund annual membership fees to customers who were assessed the fees after they had cancelled their credit card accounts and had no outstanding balance.
The California and West Virginia attorneys general had challenged Capital One's practices. The OCC became involved when Capital One became a national bank, putting it under the OCC's jurisdiction. It announced the settlement today and said that Capital One would refund about $775,000 to customers affected by the actions, which occurred from 2004 to 2006.
The bank said it would also reimburse all consumers who paid off their accounts within 90 days after requesting that the accounts be closed.
"This problem was the result of a systems issue that we fixed in 2006," said bank spokesperson Tatiana Stead in a statement. At the time, we refunded membership fees for many customers who contacted us directly but, in retrospect, we should have done so for an additional 3,400 customers as well. We sincerely regret this error.
Capital One was formerly a credit-card lender but expanded into banking as part of its strategy to weather the 2008-2009 financial meltdown. It acquired several banks over the last few years and is now the eighth-largest bank in the United States by deposits.
It is also a frequent target of consumer wrath, as it has raised interest rates, cut credit limits and canceled credit-card accounts to reduce exposure to losses.
"I received a notice from Capital One Bank stating the 4.9 percent APR on the Mastercard I have had for six years will be increasing to 13.9 percent," Helen, of Boca Raton, Florida, told ConsumerAffairs.com. "I have always paid my bill in total and on time if not early. I called the customer service line and they very politely read the 'cue cards' stating it was a "business decision due to the current economy."