Capital One agrees to repay consumers to end card probe

Capital One Bank will pay $210 million to settle federal charges that it tricked credit card customers into buying costly add-on services like payment protection and credit monitoring. Most of the money will go directly to refund customers who were led to believe the services were free or mandatory or offered more benefits than they did, officials announced this morning. The order against Capital One is the first enforcement action by the Consumer Financial Protection Bureau, which was set up a year ago to protect consumers from excessive or hidden fees and other financial threats. Under its agreement with the CFPB, Capital One will pay about $150 million to 2.5 million customers and an additional $25 million penalty. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations. The refunds will go to customers who bought add-on card services between August 2010 and January 2012. Capital One is blaming a third-party vendor and says the vendor had violated its instructions. Capital One is apologizing to its customers but settling the matter without admitting or denying the allegations laid out by regulators.