The Consumer Financial Protection Bureau today ordered GE Capital Retail Bank and its subsidiary, CareCredit, to refund up to $34.1 million to potentially more than 1 million consumers who paid sky-high interest rates for credit cards to cover health care procedures.
The CFPB said the company engaged in deceptive enrollment tactics when consumers signed up for the credit cards at doctors' and dentists' offices. Many people believed the cards were interest-free, according to the CFPB, when in reality they accrued interest at the rate of 26.99 percent if the full balance was not paid at the end of a promotional period.
"When people seek medical care, they are in a particularly vulnerable situation. They are sick or injured, or maybe a loved one is in pain," said CFPB Director Richard Cordray in a conference call with reporters. "They are not thinking carefully about the terms of a financial contract—fees, penalties, interest rates. Their focus is on getting physically better."
GE's CareCredit card is offered by 175,000 medical providers around the country. Receptionists, office managers, and office staff marketed the card to patients when they were paying for their medical care.
The CFPB alleged that the enrollment process was deceptive, the disclosures were inadequate and medical office staff were not properly trained to explain the card.
The terms of the settlement require GE to reimburse consumers, contact new enrollees within 72 hours to explain the product and to improve medical office staff training. However, the company was not hit with a fine on top of the refunds. According to the CFPB, GE took proactive steps to fix the problem and cooperated with the agency.