GE Capital’s medical credit card, known as CareCredit, has been ordered to repay $34.1 million to over one million customers for deceptive enrollment practices. The enforcement action was brought by the Consumer Financial Protection Bureau.
According to the CFPB, the issuer misled consumers into thinking that they were signing up for an interest-free line of credit. However, in reality, it was a deferred-interest program where cardholders were slammed with multiple months of interest if the balance was not paid back by the end of the promotional periods ranging from six to 24 months.
CareCredit assessed an APR of 26.99%. According to the CFPB, 1.2 million consumers were potentially impacted by the poor credit transparency regarding extra interest. These consumers will be notified and can file claims for reimbursement for extra interest they were charged.
According to the CFPB, “many consumers most of whom were enrolled while waiting for health care treatment, incurred substantial debt because they did not understand how they could have avoided deferred interest, penalties, and fees.”
Kevin Fallon McCarthy
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