Your credit card refund check may be in the mail
Card issuers begin to pay millions in federally ordered settlements
By Fred O. Williams
Yawn. Another letter from a credit card issuer. Pitch it, right?
Wrong! It could be cash. Several card issuers have begun issuing consumer refunds to atone for alleged misdeeds.
From now through early 2013, millions of credit card
and debit card users should get refunds -- some in the hundreds of dollars -- because
of settlements that are coming home to
roost. Watch your mail for terms such as "Remediation Notification" -- it
might not be junk after all.
Three major credit card issuers -- Capital One, Discover and
American Express -- are refunding about $435 million because of crackdowns by
the Consumer Financial Protection Bureau (CFPB) and banking regulators. The refunds are mainly for people who bought add-on products such as payment protection plans, which are supposed
to suspend your payments if you become ill or lose your job.
also be in line for restitution because of debt collection activity or denial
of a card.
Then there are about 13 million Bank of America debit card users
since 2001 who are in line for settlements stemming from a huge class-action
lawsuit. Without admitting wrongdoing, the
bank settled accusations that it manipulated the way it recorded debit transactions
in order to generate overdraft fees. Customers'
slice of the settlement, after costs and legal fees, is roughly $230 million,
according to court papers.
If you are eligible for any of these payments you should
receive your money automatically. The companies are responsible for figuring
out who is owed what. Current customers
will receive a credit on their account, but ex-customers need to watch their
mail for a check.
Here, according to court
papers, regulatory filings and company representatives, is a breakdown of who
is paying, for what, the average payout -- and how consumers can make sure to claim their share:
Capital One agreed to refund $150 million to about 2 million past and present
customers. Most of the refunds are for add-on
products such as payment protection plans, credit monitoring and identity theft
protection that people signed up for between Aug. 1, 2010 and Jan. 9, 2012. Of
the total, $7 million will go to some people enrolled in credit monitoring from
2002 to 2011.
Your share: The average refund is roughly
$75, but amounts will vary widely, regulatory papers show. Restitution should
include finance charges and over-limit fees resulting from the add-on products,
as well as the fees for the add-ons themselves. Some people who were denied payment protection
benefits will get the benefits they were denied, according to the company's
agreement with the CFPB. If your unpaid
account was charged off, the refund should be applied to your outstanding
balance and reported to credit bureaus. On the other hand, if you received
benefits from a credit monitoring service or a payment protection plan, you are ineligible for the refund.
What to do: Payments should be
complete in the first quarter of 2013. Checks for ex-customers from Capital One
Bank should arrive with a "Remediation Notification
Letter" that spells out how the refund was calculated. After March 31, 2013, customers who believe
they were passed over for a refund should call Capital One's customer service
number as a first step. If still unsatisfied, you can file a complaint with the
American Express agreed to refund an estimated $85 million to about 250,000
customers who were affected by a range of deceptive marketing and debt
Your share: The company would not
discuss a breakdown of the payouts, but said collection practices make up the
largest part of the settlement. The average payout is $340,
but this may not be typical. People who were promised a $300 bonus for opening
a Blue Sky card will get the money; others charged excess late fees on certain
cards will get back amounts over $35 per late fee.
What to do: AmEx expects to complete
making payments by the end of March 2013. Checks will be drawn on one of the
company's banking units, but letters that accompany the checks will make it
clear that the payment is from American
Express. The company said it does not offer a way to check if you believe you are
due for a refund, but people who believe they were passed over can file a
complaint with the CFPB.
Discover agreed to pay $200 million to about 3.5 million account holders for
marketing practices of add-on products. People who bought one of the products
by telephone from December 2007 to August 2011 are eligible. People who
actually collected on the product are not eligible for the reimbursement.
Your share: Some accounts had multiple add-on products,
so individual refunds will vary widely. Also, only the first 90 days of dues
will be refunded for accounts that were operating for more than a year. The average refund works out to be $57 per account holder, but that may not represent the typical payout. The four add-on products
involved were payment protection, credit score tracker, identity theft
protection and wallet protection, which helps cancel stolen credit
See related: Credit card insurance: don't believe the hype
What to do: Discover is awaiting
final approval of its refund plan from the CFPB and the Federal Deposit
Insurance Corp., and expects to complete payments by mid-February 2013. If you do not receive a payment by then and
think you are owed one, the company said to call the customer service line.
Bank of America
BofA posted debit card transactions from the highest dollar amount to the
lowest, instead of in chronological order, meaning accounts became overdrawn
faster. A settlement was approved in
November 2011, but appeals have delayed the payout until now.
BofA says that postcard-style award checks were mailed Nov. 12 through Nov. 26,
and should finish arriving in mailboxes early this month. People received pro-rata amounts of the
settlement pot based on their overdraft fee history -- not a full refund of
their overdraft charges. Current customers were supposed to receive an account
credit around Nov. 2.
Your share: The settlement is shared
by roughly 13 million class members, according to court papers, meaning just those customers
affected by the debit policy from Jan. 1, 2001, to May 24, 2011. Of the $410 million
settlement total, 30 percent comes out for legal fees. Another 5 percent to 14 percent will go for financial
education and advisory services on behalf of class members who could not be
identified. That leaves the remaining payout for customers at about $230 million
-- minus unspecified administrative expenses of the settlement fund itself,
such as mailing the checks. On average,
that works out to as little as $17 per class member.
What to do: Since
this was a court case, you should already have received notification by mail,
along with papers for opting out, if you are part of the settlement class. However, if
you believe you have a claim and have changed address or not received payment,
contact the settlement administrator by mail at: Checking Account Overdraft
Litigation, P.O. Box 2505, Faribault, MN 55021-9505. Details about the
distribution are also available at http://www.bofaoverdraftsettlement.com/Home.aspx
or by calling an automated voice response system at 800-372-2390.
Published: December 5, 2012