Good for the consumer financial protection board
Cardholders who enrolled in a payment protection or credit monitoring product — or who tried to cancel one of these products but were persuaded by a call center representative to keep it — on or after August 1, 2010, will be refunded the money they paid for the product, as well as any finance charges, over-the-limit fees or interest paid, the CFPB said.
Capital One will also stop marketing all of these products until it submits a compliance plan that is approved by the CFPB.
This is a case of a sophisticated financial institution taking advantage of unsophisticated consumers, and I applaud the Consumer Financial Protection Board for doing something about it.
And, no, the CFPB is not an agency that I expected to find myself applauding.
UPDATE: On the other hand, I am inclined to agree with Jonathan Macey that the new mortgage rules are not so good. Here, the CFPB appears to have gone beyond thinking about how to protect naive consumers. Instead, it is trying to create a “pro-consumer” mortgage product, and as Macey points out, loading a mortgage with features that work to the detriment of the lender is going to reduce the supply of loans. Here is where I think that principles-based regulation is more likely to produce better results.
Jul 18 2012 at 4:24pm
Bravo for open mindedness.
Jul 18 2012 at 9:46pm
Are you sure you’re a Libertarian?
Jul 19 2012 at 2:23am
Hopefully this post is just driest sarcasm you’ve ever exhibited.
These were voluntary transactions between adults.
People do “stupid” things with their money all day, every day. But it’s their choice and their money. And I put the word “stupid” in quotes because, for all we know, they got more utility out of this product (peace of mind?) than they did from having the cash in their bank account.
There is no place for the government here to force me to pay for an enforcement agency to prevent voluntary transactions between adults because some people find the transaction “stupid.” What’s next? Forcing me to pay for an agency to prevent private firms from selling soda to adults? I’m stunned that you think the loss of freedom (mine in being forced to pay for the enforcement agency, and the private firms and adults that lose the freedom to engage in voluntary transactions) is worth protecting some naïve adults from the consequences of some of their decisions that some people happen to find “stupid.” I suppose these same adults find some of your decisions stupid too.
Jul 19 2012 at 9:20am
Thank goodness we have government to protect us from ourselves. Imagine if we were allowed to eat Big Macs!
Jul 19 2012 at 12:28pm
Don Boudreaux discusses this post at Cafe Hayek.
In his comment section, I reminisce about my experience in the FTC trying to define “unfair” acts or practices. The questions are not easy.
JVDeLong, Author: Ending ‘Big SIS’ (The Special Interest State) and Renewing the American Republic.
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