The U.S. consumer financial watchdog ordered a General Electric Co unit on Tuesday to refund up to $34.1 million to customers who it said were misled about healthcare credit cards.
The Consumer Financial Protection Bureau said GE Capital Retail Bank's CareCredit unit signed up consumers for credit cards that were marketed as interest-free. Actually, the cards accrued interest that could kick in at the end of a promotional period.
CareCredit, which offers personal lines of credit for healthcare needs, did not immediately respond to a request for comment.
The credit cards, sold at some 175,000 offices of doctors and dentists around the country, accrued interest at a rate of 26.99 percent that was charged to the borrower in full if there was any balance on the card at the end of a promotional period, regulators said.
Many patients did not receive any paper copy of the credit card agreement but instead relied on staff at healthcare offices who were themselves sometimes confused about the terms of the cards, the regulators said.
"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," CFPB Director Richard Cordray said in remarks to reporters.
The agency said it began looking at the company after receiving hundreds of complaints from consumers.
The CFPB recently flagged deferred-interest products as a particular area of concern because customers often confuse them with credit cards that offer low introductory rates.
Under the terms of the order, CareCredit agreed to improve its disclosures to consumers and its training of staff that market its cards.
About one million borrowers may be eligible for a refund, the agency said.
First published December 10 2013, 12:38 PM