CFPB Takes Action Against Deferred Interest Credit Provider for Deceptive Practices
By Consumers Union on Tuesday, December 10th, 2013
We’ve been warning consumers of the dangers of deferred interest credit plans (see here, here and here). There is good news to report for consumers. The Consumer Financial Protection Bureau (CFPB) took action against one of the larger companies in this space: CareCredit.
CareCredit’s deferred interest credit cards are sold in 175,000 healthcare providers’ offices, including those of doctors and dentists. (We’ve called these placements inherently exploitative.) The CFPB found that the folks enrolling in these plans weren’t getting all the facts they needed. Problems identified by the CFPB include:
- Deceptive practices in the enrollment processes
Staff at the offices where CareCredit cards were sold “misled some consumers during the enrollment process by not providing adequate guidance clearly laying out the terms of the deferred-interest loan.”
- Inadequate disclosures
Some consumers were not given copies of the actual CareCredit agreements and “instead had to rely only on the oral explanations given by the service provider or office staff.” Some who enrolled in the program thought they were getting an interest-free card, and didn’t realize that they were getting a high-interest (26.99%) deferred-interest product.
- Poorly trained staff
Some staffers at the offices where CareCredit products were sold, and who were charged with explaining the CareCredit agreement to borrowers, didn’t even understand the product themselves, and had “little or no training” from CareCredit.
We’re glad to see this action by the CFPB, but we’d still like to see deferred interest credit cards banned. Here’s hoping for an end to these abusive, confusing traps in the New Year!
Have you been burned by a deferred interest credit card? Share your story!