NEW YORK (TheStreet) -- The Consumer Financial Protection Bureau has set quite a precedent with its first enforcement action against Capital One (COF), and investors could see an opportunity if and when the regulator takes action against another credit card lender.
The CFPB is celebrating its one-year anniversary as a unique agency within the Federal Reserve, that actually sets its own budget. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act -- signed into law by President Obama in July 2010 -- the CFPB is charged to "help consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives."
The CFPB's first regulator enforcement action on July 18 showed that the Bureau meant business, when it ordered Capital One to refund $140 million to two million credit card customers and pay an additional fine of $25 million for failing to properly monitor third party vendors' sales of additional services to customers, including "credit protection" and "Credit monitoring" services.
Capital One said it was setting aside $150 million for the refunds, and its main subsidiary Capital One Bank (USA), NA, agreed to an additional $35 million penalty from the Office of the Comptroller of the Currency, making for a total tab of $210 million.
"It is a huge amount of money," says Linda Goldstein -- a partner with Manatt, Phelps and Phillips, chairing the firm's Advertising, Marketing & Media division -- who also adds that the CFPB's agreement with Capita One suggests "on its face that the Bureau was not willing to engage in much negotiation on consumer redress." Goldstein adds "we're going to see more of this for sure," and that "any financial institution marketing these services wants to take a hard look at complaint rates charge-back rates, the marketing materials and putting an affirmative monitoring program in place."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV