HSBC, Capital One and Discover will pay a settlement to Missouri after the credit card companies allegedly duped customers into paying for a protection plan that didn’t provide protection, Missouri Attorney General Chris Koster said Friday.
The three credit card companies will pay $2,235,000 in total, which breaks down to $825,000 for HSBC, $740,000 for Capital One and $760,000 for Discover. They must also put a halt to marketing activities for protection plans in Missouri.
The claims in the suit allege that the credit card companies would mislead consumers by charging a monthly fee for a protection plan that would be used if the consumer became disabled, unemployed or the account was suspended. The monthly fee was also to be used to pay down the customer’s balance.
When consumers filed for the protection, they allegedly were told they didn’t qualify. Consumers that qualified to have the minimum payment waived allegedly would find that their credit card balance would increase due to fees and interest, in addition to being charged for the payment plan.
“Many Missouri consumers paid hundreds of dollars for add-on protections and never received any benefit,” Koster said. “These products were aggressively marketed with obscure terms and conditions, which enabled these companies to reap a financial benefit at their customers’ expense.”
In some cases, credit card customers didn’t know they had been signed up for the agreement, had been talked to by a telemarketer or were upsold during a call to the company.