GE Capital Retail Bank has agreed to repay around $34.1m to over one million customers, for deceiving them with misleading information about the terms of its CareCredit medical credit cards.
The Consumer Financial Protection Bureau (CFPB) found evidence against GE Capital and its subsidiary CareCredit, a medical credit card business, for practising deceptive enrolment processes, inadequate disclosures and poorly trained staff.
According to CFPB, the issuer was misleading consumers into thinking they were signing up for an interest-free line of credit, but in reality it was a deferred-interest programme, which resulted in higher interest rates than traditional credit cards.
The CFPB found that CareCredit assessed an APR of 26.99% on cardholders’ balances between periods of six to 24 months.
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CFPB director Richard Cordray said deferred-interest products can be risky for consumers in the best of circumstances, and the action ensures that CareCredit will no longer profit from consumer confusion.
The CFPB has also ordered GE Capital Retail Bank and CareCredit to enhance the disclosures, and follow new transparency principles, including mandatory training for staff.