By Claudia Buck
---- — ‘Tis the season of consumer refunds.
In coming weeks, more than $425 million in refunds and restitution will go out to millions of consumers nationwide, thanks to a recent round of crackdowns on deceptive credit card practices.
Another $410 million from Bank of America is already landing in pockets of millions who got stuck with excessive debit card fees.
In most cases, no one will get rich off these settlements. In fact, folks will likely get back just pennies on the dollar.
Behind some of the payouts is the Consumer Financial Protection Bureau, a federal agency launched in July 2011 to play “neighborhood cop” in policing the consumer financial market, everything from mortgages to student loans to credit cards.
Working with other federal agencies, the bureau this summer and fall ordered American Express, Capital One and Discover to return a combined $425 million to consumers, primarily for misleading sales tactics.
“We think this is definitely a case of enforcement getting better,” said Bill Hardekopf, CEO of credit card comparison site LowCards.com, who follows the credit card industry.
Consumers don’t need to do anything to get their money. The companies are required to contact customers, whose refunds will be automatically deposited into an existing account. If they’re not a current customer, they’ll be mailed a check.
But be on the lookout if you think you’re eligible. The checks are easy to mistake for junk mail. For instance, the Bank of America refund check comes as a small, white fold-over card with a bar code on the front. The return address name is likely unfamiliar: “Rust Consulting Inc.,” which is identified as the “Checking Account Overdraft Administrator.”
If you get a BofA check, don’t delay in cashing it: It’s void in 180 days.
Here’s a list of some of the recent refunds under way:
— Bank of America. Roughly $410 million involves BofA checking or savings accounts — accessed with a debit card — between January 2001 and May 2011.
According to the class-action lawsuit that resulted in the settlement, BofA routinely processed debit transactions in order of highest to lowest amounts. Instead of debiting them chronologically, in the order they occurred, the bank started with the highest amount, say a $1,000 rent payment. If that exceeded what was in the person’s bank account, every subsequent debit charge racked up overdraft fees — typically $35 per transaction.
Dozens of banks have been hit with similar class-action lawsuits involving overdraft fees in recent years.
Although the BofA settlement was announced in November 2011, the legal wrangling wasn’t finalized until a few weeks ago, when checks started going out to consumers.
For more details on the BofA settlement, go to www.bofaoverdraftsettle ment.com or call (800) 372-2390.
— American Express. Three AmEx subsidiaries were ordered to pay $85 million to 250,000 cardholders for various illegal credit card practices between 2003 and spring 2012. The violations “occurred at every stage of the consumer experience, from shopping for cards, to applying for cards, to paying charges and to paying off debt,” said the consumer bureau.
American Express customers are expected to receive payments no later than March 31.
— Capital One. It’s been ordered to pay $140 million to 2 million customers “who were pressured or misled into buying credit card products they didn’t understand, didn’t want or, in some cases, couldn’t even use,” the CFPB said in a statement.
It said Capital One’s call centers targeted consumers with low credit scores. When those customers called to activate their credit cards, salespeople misled them about the cost, eligibility and benefits of various products, such as job-loss “payment protection” or credit score monitoring.
Those customers will be reimbursed with interest for financial products purchased after August 2010. Repayments are expected to be delivered by the end of this year.
— Discover. Accused of deceptive telemarketing tactics to sell various “add-on” credit card products, Discover is paying $200 million to more than 3.5 million consumers billed between December 2007 and August 2011.
Those extra products included credit score monitoring, as well as “protection” for identity theft, stolen wallets or delayed payments caused by job loss or hospitalization.
All customers will receive at least 90 days’ worth of fees they paid. The amounts vary, based on products purchased and how long a customer was billed.
The payments are expected to start in early 2013 and be concluded by mid-February.
All three companies are paying a combined $66.5 million in civil penalties to various federal agencies. For details on the three credit card settlements, call 855 411-CFPB or go to the CFPB’s website: www.consumerfinance.gov.