WASHINGTON -- Capital One has agreed to pay $12 million to resolve allegations the bank violated special consumer protections in federal law for members of the military, the Justice Department announced Thursday.
The government says Capital One wrongfully foreclosed on some homes and improperly repossessed some cars. In addition, the government says the bank obtained wrongful court judgments against some service members and improperly denied interest rate relief on some credit card and car loans.
In a settlement under the Servicemembers Civil Relief Act, Capital One will pay $7 million in damages, including at least $125,000 to each service member whose home was unlawfully foreclosed upon and at least $10,000 to each service member whose vehicle was unlawfully repossessed.
Capital One will provide a $5 million fund to compensate service members denied appropriate benefits on credit card accounts, auto and consumer loans.
The government says Capital One engaged in the practices from July 2006 to November 2011. The government began looking into Capital One following a claim by a service member who said he failed to receive the required interest rate reduction on his Capital One credit card account. That complaint was relayed to Justice by the Office of the Staff Judge Advocate at Davis-Monthan Air Force Base in Arizona.
One of the nation's 10 largest banks by deposits, Capital One serves banking customers through branches primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia.The settlement, still subject to court approval, was filed in federal court in Alexandria, Va. Capital One is headquartered in McLean, Va.