The US Consumer Financial Protection Bureau (CFPB) has ordered GE Capital Retail Bank and its subsidiary, CareCredit, to repay up to $34.1m to more than 1 million consumers for misleading credit card enrollment practices.
CFPB claimed that the company deceived consumers about the terms for medical credit cards offered by doctors to pay for procedures.
The consumers signed up for CareCredit credit cards, assuming that they were interest free, instead the company charged interest from consumers, if they failed to pay full balance at the end of a promotional period.
Since January 2009, consumers who signed up for the credit card incurred substantial debt as they did not understand how they could have avoided deferred interest, penalties, and fees.
CFPB director Richard Cordray said, "Medical debt is already a big problem for many Americans. Poor credit card transparency should not be making the problem even worse.
"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."
The Bureau noted that GE Capital avoided paying a fine due to its cooperation in the regulatory investigation as well as its readiness to refund consumers.
A division of GE Capital, CareCredit is one of the largest issuer of medical credit cards with approximately four million cardholders and 175,000 participating medical offices, across the US.