Investors who purchased shares of Capital One at least five years ago and still hold these shares.
Allegedly, Capital One had a practice of charging customers for add-ons to their credit card accounts for protection that wasn't required or agreed upon. As a result, the bank was charged millions of dollars in fines from various agencies.
It has been alleged that Capital One engaged in unfair billing practices between May 2002 and June 2011 in violation of Section 5 of the Federal Trade Commission (FTC) Act.
What is a Shareholder Derivative Action?
A derivative action is a lawsuit brought by a shareholder on behalf of a company against a third party. In this instance, attorneys are looking to bring a case by a shareholder on behalf of the company against the board of directors. Derivative actions are beneficial in that they allow a shareholder to take action to protect the interests of the company and its public shareholders when officers and directors fail to uphold their duties and obligations. In lodging such a claim, a sole investor may be able to induce company-wide change which otherwise might not have occurred, including the removal of board members who injured the company and the award of monetary damages.
Did Capital One Mislead Consumers?
It has been alleged that Capital One routinely charged their customers for add-ons to their credit card accounts for protection that wasn't necessary or agreed upon. This resulted in a number of problems for the bank, including a fine for deceptive marketing. In July 2012, it was reported that the Consumer Financial Protection Bureau fined Capital One $210 million for deceptive marketing tactics employed by the bank’s vendors to pressure or mislead its credit card holders into paying for “add-on” products. As part of the fine, Capital One paid $150 million to more than 2 million customers who purchased “payment protection” or “credit monitoring” services between 2002 and 2012. According to the Bureau, low-income consumers were misled about the benefits and costs of the programs when they called to activate their credit cards. For instance, it was alleged that some consumers were not told by call center vendors that these “payment protection” services were voluntary and/or had trouble cancelling the programs. It was also reported that these customer service representatives sold the protection plans, which forgive some credit card payments if the holder loses their job, dies, becomes incapacitated, etc., to consumers who were ineligible because they were currently out of work or disabled.
Capital One Under Investigation for Breach of Fiduciary Duties
Attorneys are currently investigating whether the board of directors for Capital One breached its fiduciary duties by:
Allowing Capital One to market, sell and operate products in violation of laws and regulations, including the Consumer Financial Protection Act
Allowing Capital One to engage in unfair billing practices between May 2002 and June 2011 in violation of Section 5 of the Federal Trade Commission (FTC) Act, thus exposing the Company to a multi-million dollar fine from the Office of the Comptroller of the Currency
Failing to provide proper training and oversight of third-party vendors to the detriment of the bank
Failing to monitor the bank’s marketing, sales, and operations of its payment protection and credit monitoring programs
Exposing Capital One to potential liability and substantial costs from regulatory investigations into its payment protection products and credit monitoring products
If you purchased shares of Capital One and currently still hold these shares, you may be able to bring a case against the company's board of directors.