U.S. Credit-Card Lenders Shun Add-Ons as CFPB Cracks Down
October 2, 2012
JPMorgan Chase, Bank of America, and American Express are among the credit card lenders retreating from a $2.4 billion market as regulators set their sights on deceptive marketing of products. "Scrutiny from the Consumer Financial Protection Bureau already has resulted in fines against several financial institutions, prompting them to curtail sales of add-on services that promise to help customers pay card bills if they become ill or lose their jobs or that offer to monitor their credit. "The fees are under pressure and the profitability model of a credit card business is in question," said Nomura Securities analyst Bill Carcache. "The CFPB further enforces what the CARD Act set out to do." Additional punitive action will be forthcoming, according to CFPB director Richard Cordray, who said, "We are signaling as clearly as we can that other financial institutions should review their marketing practices to ensure that they are not deceiving or misleading consumers into purchasing financial products or services."
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