Capital One's Actuals
Was Capital One’s sales pitch fraudulent in this sense? No; at minimum, they’re missing element #3 (falsity).
As commenter Thomas DeMeo pointed out, the actual allegation may differ from Bryan’s hypothetical.
- Misled about the benefits of the products: Consumers were sometimes led to believe that the product would improve their credit scores and help them increase the credit limit on their Capital One credit card.
- Deceived about the nature of the products: Consumers were not always told that buying the products was optional. In other cases, consumers were wrongly told they were required to purchase the product in order to receive full information about it, but that they could cancel the product if they were not satisfied. Many of these consumers later had difficulty canceling when they called to do so.
- Misled about eligibility: Although most of the payment protection benefits kicked in when consumers became disabled or lost a job, some call center representatives marketed and sold the product to ineligible unemployed and disabled consumers. Despite paying the full fees, they could not get all the benefits of payment protection; some later filed claims that were denied because their “loss” (e.g. loss of job or onset of disability) occurred prior to enrollment.
- Misinformed about cost of the products: Consumers were sometimes led to believe that they would be enrolling in a free product rather than making a purchase.
- Enrolled without their consent: Some call center vendors processed the add-on product purchases without the consumer’s consent. Consumers were then automatically billed for the product and often had trouble cancelling the product when they called to do so.
Bryan points out that he still does business with Capital One, and so do I. My hope is that as a Ph.D economist and student of the financial system, I can avoid being scammed by a bank. But that does not mean that I approve of a bank that preys on the weak.
By the way, when I read that “consumers were wrongly told they were required to purchase the product in order to receive full information about it,” I could not help but be reminded of Nancy Pelosi on Obamacare.