Capital One Told to Pay Back $2.35M to Customers

Consumers who filed for bankruptcy with Capital One several years ago may be soon receiving a check in the mail from the bank.

In late January, the Department of Justice ordered the bank to refund approximately $2.35 million to consumers for money it found the bank collected improperly on debts that had been previously discharged. The matter began in October 2008, when the DOJ’s U.S. Trustee Program entered a settlement agreement with Capital One to resolve allegations that the company attempted to collect on debts that previously had been discharged in bankruptcy.

“This settlement results from the U.S. Trustee Program’s ongoing efforts to protect consumers from harm by creditors who abuse the bankruptcy system,” said Jane Limprecht, spokesperson for the program.

As part of the settlement with the USTP, Capital One agreed to an audit process overseen by an independent auditor chosen by the court to examine Capital One customer accounts to ensure that all monies improperly received by Capital One as a result of erroneously filed claims were returned to the rightful consumers.  The auditor released its findings Jan. 18, also approving reimbursement to consumers and bankruptcy trustees for out-of-pocket costs and expenses, including attorneys’ fees, incurred to contest erroneous claims. Capital One has since filed an objection to the auditor’s report.

The bank has said it fixed the glitch in the system that caused the matter, and has done its part to rectify the situation.

“This matter relates to a process error corrected in 2007. Working closely with the USTP, we identified the impacted customer accounts and have provided restitution,” Tatiana Stead, a Capital One spokesperson, told The bank declined to comment further on the investigation and payments.

And last week the bank filed objections to the auditor’s report, calling it confusing and potentially misleading on the issue of erroneous claims. The company is asking the U.S. Bankruptcy Court for the District of Massachusetts to strike the interim report or convene a conference to address the report’s alleged deficiencies, according to Westlaw News & Insight.

All affected consumers and trustees will receive further information from the auditor.