CareCredit Ordered to Repay $34.1M for "Deceptive" Practices
Published: December 23, 2013
Medical financing company CareCredit has been ordered to repay $34.1 million to its customers by the federal Consumer Financial Protection Bureau (CFPB). The agency says the GE Capital subsidiary misled consumers into thinking they were opening interest-free lines of credit, then hit them with huge deferred-interest charges if their accounts weren't paid off by the end of a specified time period.
The CFPB says it received hundreds of complaints from customers about the company's program, which retroactively applied a 26.99% annual percentage rate interest charge onto the entire amount of patients' loans unless they were paid off in full during promotional periods which ranged from 6 to 24 months.
About 4.1 million Americans have a CareCredit card. More than 1.2 million customers may be eligible for refunds. As a part of the consent order, CareCredit must:
- create new disclosures that clearly describe the deferred-interest product;
- give consumers advance notice of the expiration of the promotional period; and
- enroll patients directly through a CareCredit representative, not through your office staff, for transactions more than $1,000.
"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," said the CFPB.
CareCredit didn't provide clear disclosures, nor did it properly train its staff to make sure reps understood the agreements, the agency said.
CareCredit did not admit or deny any wrongdoing. Dori Abel a spokeswoman for parent company GE Capital, told The Washington Post, "We'll continue to invest and enhance the CareCredit program as we look forward to continuing to serve our cardholders and providers."
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