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.
You may 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 CFPB.
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 cards.
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.
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