General Electric Co. (GE)’s retail finance unit will refund as much as $34.1 million to more than 1 million people who U.S. regulators said were deceptively enrolled in a credit card for medical debt.
GE Capital Bank entered into a consent agreement with the Consumer Financial Protection Bureau, which said in a statement today that the company’s CareCredit business sold consumers a card at the offices of doctors, dentists and other providers to cover medical debt with a “deferred interest” provision that resulted in annual interest payments as high as 26.99 percent.
“Deferred-interest products can be risky for consumers in the best of circumstances, and today’s action ensures that CareCredit will no longer profit from consumer confusion,” Richard Cordray, the consumer bureau’s director, said in an e-mailed statement.
GE Capital didn’t admit or deny wrongdoing in the consent order. Dori Abel, a spokeswoman for GE Capital, said by telephone: “CareCredit is a responsible lender with consistently high customer satisfaction ratings and repeat usage. We worked cooperatively with the CFPB and are committed to providing more education for consumers and health care providers and enhanced consumer disclosures.”
Since January 2009, consumers were sometimes misled about the card’s terms, the consumer bureau said. Many consumers got no disclosures, and instead relied on oral explanations from staff, who themselves were confused by the details, the bureau’s investigators found.
Cordray said many patients believed they were getting 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,” he said in a statement prepared for a news conference.
In addition to creating the $34.1 million reimbursement fund, GE agreed to improve disclosures, contact consumers directly to explain the product and improve staff training.
CareCredit is the largest issuer of consumer health-care financing in the U.S., according to the New York Attorney General’s office. GE Chief Executive Officer Jeffrey Immelt has been focused on shrinking GE Capital, as the unit faces heightened regulatory scrutiny from the Federal Reserve, which identified it as a potential risk to the financial system.
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