First CFPB action against credit card add-on vendors

By guest blogger Jessica Ranucci

The Consumer Financial Protection Bureau filed complaints last week against two companies that charge consumers for credit card add-ons — such as “credit monitoring” and “identify theft protection” — that the consumers never receive.

The two companies, Affinion and Intersections, partnered with banks to sell add-on services. Fees were charged automatically to the customers’ accounts, even when the customers did not receive the promised benefits. The CFPB alleges that the imposition of these fees was an unfair practice in violation of the Dodd-Frank Act.

These complaints represent the first time that the CFPB has taken action directly against companies that provide the add-on services; in the past, the agency has taken on the banks that partner with them.

The CFPB complaints were accompanied by proposed consent orders. Under the terms of these orders, Affinon would refund $6.8 million to 73,000 consumers who were charged for services never received, end unfair billing and retention practices, and pay a $1.9 million civil penalty. Intersections would pay a full refund, end unfair billing practices, and pay a $1.2 million civil penalty.

Read the complaint against Affinion, proposed consent decree, the complaint against Intersections, and that proposed consent decree.


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