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When you gave thanks on Thanksgiving, among those things you’re grateful for should have been the Consumer Financial Protection Bureau.
In its latest enforcement action on behalf of mistreated consumers, the CFPB has ordered GE Capital and its medical credit card subsidiary, CareCredit, to repay $34.1 million to more than 1.2 million customers who the CFPB says were victimized by deceptive enrollment tactics.
You may have encountered CareCredit when you’ve faced a medical, dental or veterinary bill that was more than you had in your checking account. More than 175,000 doctors, dentists and other medical professionals offer the card to consumers.
CFPB director Richard Cordray explained how it works:
Our investigation showed that many patients thought they were signing up for an interest-free loan. Or they may have thought they were signing up for an in-house payment plan with their doctor. But the card was really a “no interest if paid in full” product that is a much trickier deal.
In fact, interest is accruing at the sky-high rate of 26.99 percent, and you’ll pay it all if you don’t manage to pay off the entire balance within a promotional period, typically six to 24 months.
With that kind of interest, you’d probably be better off charging your medical bill to your regular credit card.
During the course of our investigation, we found that many patients did not receive paper copies of the credit card agreement and instead relied on staff at health care offices to explain it to them. Some staff had received little or no training from CareCredit. Some providers themselves admitted that they were confused about the actual consequences of the deferred-interest terms.
The company has been instructed to take specific steps to make sure consumers know what they’re getting into when they sign up for this card.
If you are eligible to file a claim for interest you’ve paid, CareCredit will contact you. An independent adjudicator will review all claims and decide if you’ll be reimbursed.