Capital One Bank has agreed to settle claims by the Vermont Attorney General’s Office that it failed to disclose important information on “0% interest” solicitations sent to Vermont businesses. The settlement requires Capital One to change its solicitations and pay the State $150,000 in investigative costs. Vermont Attorney General William H. Sorrell said, “No matter how big they are, companies have an obligation to provide accurate information when they market their services.”
Capital One Bank (USA), N.A., headquartered in McLean, Virginia, has for some time been sending direct-mail solicitations to Vermont businesses, offering the use of an “access check” to borrow up to a certain amount of money—for example, $5,000—at 0% interest for 12 months. However, businesses that use an access check are considered to have a continuing balance on their credit card account until the check amount is paid back, even if all other purchases are paid in full by the monthly due date. As a result, interest accrues immediately on all new purchases on the account, and businesses that normally pay off all of their new purchases each month end up paying interest on those purchases. According to the Attorney General, this practice was not disclosed by Capital One, violating the Vermont Consumer Protection Act.
Under the settlement, for one year, Capital One will include this disclosure on the front of its access check offers: “Please read … If you accept this offer, you will pay interest on all purchases made with your credit card until your entire balance is paid off. See Special Notice on the back of this offer.” For an additional four years, Capital One is required to include a clear and conspicuous front-page disclosure to the same effect; and beyond that, the State retains its right to take legal action if warranted.
In addition to the disclosures and the payment to the State, Capital One is required, within 30 days of signing the settlement, to reimburse any Vermont business that paid interest on new purchases while a 0% access check balance was pending that it would not have paid absent that balance. Any such refunds that cannot be returned to a business will be sent to the State to be treated as unclaimed property.
Individual consumers should be aware that “0% interest” offers may similarly result in interest being assessed upon purchase. However, the Attorney General’s settlement addresses only solicitations to businesses, because federal law “preempts” states from enforcing their laws with respect to credit card solicitations to individuals.