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Published: Thursday, 7/26/2012

Cashing in

What's in your wallet? Maybe a little more green, now that Capital One must reimburse 2 million customers for over-aggressive selling.

The big bank was fined $210 million last week by the federal Consumer Financial Protection Bureau for selling customers credit-card products they could not use or did not want. The violations go back to August, 2010.

The penalty was the first action by the new regulatory agency created by the Dodd-Frank law, enacted as Congress's response to the financial crisis of 2008. The bureau, which was noisily opposed by congressional Republicans, is charged with protecting customers from high-pressure, deceptive, or aggressive marketing tactics by banks and other financial institutions.

The agency said Capital One's call centers misled customers about payment-protection insurance, an option that helps cardholders pay their credit bills in the event of job loss, death, or disability. Regulators said the marketers deceived customers into thinking that the protection was free and mandatory, and would improve their credit scores. The bureau's order alleged that call centers sold the provision to ineligible jobless customers and forced it on them without consent.

As a result of the federal action, Capital One said it will make sure its subcontractors adhere closely to a proper sales script and not engage in unfair tactics. Later this year, customers will receive refunds averaging less than $100 apiece.

This is just the kind of role the bureau is expected to play. Its successful action shows how wrongheaded the political opposition to the agency's creation was.

Richard Cordray, the director of the bureau and a former Ohio attorney general, said the Capital One case is only the beginning. Findings on other financial institutions are forthcoming, he added.

If this type of action becomes the norm, taxpayers will get their money's worth from the consumer watchdog.

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