Mo. secures settlement from top credit card companies

Last edited 1:58 p.m., Jan. 16, 2015

Missouri Attorney General Chris Koster today announced his office reached a settlement with three major credit card companies.

The $2.24 million payment to the Show-Me State resolves allegations that Discover, Capital One and HSBC misled consumers through the marketing of payment-protection plans and other add-on products, according to a news release.

“Many Missouri consumers paid hundreds of dollars for add-on protections and never received any benefit,” Koster said in the release. “These products were aggressively marketed with obscure terms and conditions, which enabled these companies to reap a financial benefit at their customers’ expense.”

In the settlement, HSBC agreed to pay $825,000, Discover, $760,000, and Capitol One, $740,000, into the Missouri Merchandising Practices Revolving Fund, which covers consumer protection education and enforcement. The companies also are prohibited from selling payment-protection products and related add-on products, such as identity-theft protection, in a misleading way.

After investigations, Koster’s office alleged consumers were led to believe that, for a monthly fee, their credit card payments could be suspended if they become unemployed or disabled. Those who applied for the protection, however, were often told they did not qualify.  

The monthly fees were added to consumers’ credit card balances, reducing the available credit by the amount of the fee. Additionally, while card issuers agreed to waive minimum payments during hardships, the consumer’s balance often would increase due to charged interest and fees, including the continued payment-protection plan, according to the release.

According to Koster’s office, some consumers were unaware they had signed up for the payment-protection plan or another add-on service, some were automatically enrolled if they failed to respond to a mailed notice and some were misleadingly sold services after calling their card issuer on another matter or solicited directly by telemarketers.