Credit Cards > Credit Card News > Auditor will review 650,000 Cap One credit card accounts to ensure money is returned
Print
Email
Capital One must repay $340,000 to bankrupt debtors
Issuer collected credit card debts already discharged in bankruptcy
By Connie Prater
An auditor will review 650,000 Capital One credit card accounts to ensure that money improperly collected from people whose debts were already discharged in bankruptcy proceedings are returned.
Creditors must file "proof of claim" forms with the bankruptcy court detailing how much debtors owe, dates the debts were incurred and whether the debts are secured, such as with property, or unsecured, as in credit card loans. The form establishes which creditors have priority in payment through the bankruptcy courts.
"Capital One filed approximately 5,600 proofs of claim seeking payment of debts that had been discharged in prior bankruptcy cases," according to trustee program allegations. In the complaint, Capital One acknowledged receiving $340,000 from estates filing for Chapter 13 bankruptcy, but indicated the issuer "has returned most of the improperly obtained payments."
According to the trustee program, "The auditor will also approve reimbursement to debtors and trustees for actual out-of-pocket costs and expenses, including attorneys' fees incurred to contest erroneous claims."
An auditor will review Capital One claims filed from Jan. 1, 2005, up until two years after a consent degree on the settlement is entered in court. The settlement must be approved by the U.S. Bankruptcy Court for the District of Massachusetts. The audit period may be extended an additional year if more than 100 false claims are found in one year.
As of February 2008, Capital One was the fifth largest issuer of general purpose credit cards in the United States, according to industry data compiled by The Nilson Report newsletter.
Three most recent Legal, regulatory, privacy issues stories:
Regulator rejects proposal to forgive some credit card debt – The Office of the Comptroller of Currency issued a response to a proposal to forgive some borrowers' credit card debts. No way, OCC says. The plan was supported by the banking industry and consumer groups. ...
Fed report shows increase in credit card use – Credit card use unexpectedly rose in September, as cardholders appeared to be increasingly reliant on plastic in the face of economic threats. ...