On July 1, the Consumer Financial Protection Bureau announced that it had agreed to consent orders in pending lawsuits against two sets of defendants – Affinion Group Holdings Inc. and its subsidiaries (“Affinion”), as well as Intersections, Inc. (“Intersections”) – over allegations that the vendors had unfairly charged consumers for credit card add-on benefits that they did not receive. The CFPB claimed that the vendors partnered with banks to provide the add-on services for a monthly or annual membership fee, including credit monitoring and identity theft protection, but failed to follow through in actually providing the services, in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
According to the CFPB, Affinion enrolled consumers in add-on products that claimed to provide consumers with benefits including credit monitoring, credit report retrieval, or both. Consumers generally paid between $6.95 and $15.99 per month for these products, which were typically billed directly to their credit cards or deposit accounts. The CFPB claims, however, that Affinion billed full-product fees to at least 73,000 accounts from July 2010 through August 2012, while failing to provide the full credit monitoring or credit report retrieval services promised, and failed to refund fees to those consumers.
The CFPB alleges that from 2009 through early 2013, Intersections billed or instructed its partner banks to bill approximately 300,000 consumers who signed up for their add-on products, knowing that consumers were not receiving all the benefits for which they paid.
Under the proposed consent orders, Affinion would pay approximately $6.8 million in monetary relief for eligible consumers who have not yet received refunds and $1.9 million in civil money penalties, while Intersections would pay approximately $55,000 in monetary relief to eligible consumers who have not yet received refunds and $1.2 million in civil money penalties.
“Consumers have every right to get what they pay for,” said CFPB Director Richard Cordray. “But we are still finding that thousands of consumers paid for add-on benefits they were promised but never received. We continue to address unlawful conduct in this space and are signaling to other financial institutions and their service providers that their marketing and billing practices must be fair to consumers.”
The cases are Consumer Financial Protection Bureau v. Affinion Group, LLC et al., Civil Action No. 5:15-cv-01005 (U.S.D.C. D.-Conn) (copy of the proposed consent order can be found here), and Consumer Financial Protection Bureau v. Intersections Inc., Civil Action No. 1:15-cv-00835 (U.S.D.C. E.D.-Va.) (copy of the proposed consent order can be found here).