WASHINGTON (AP) — General Electric Co.'s credit card division will refund $34.1 million to consumers who government regulators say were misled about the potential costs of relying on a deferred-interest plan to pay their medical bills.
The settlement announced Tuesday by the Consumer Financial Protection Bureau affects more than 1 million people who obtained CareCredit cards from GE Capital Retail Bank since 2009. GE Capital didn't acknowledge any wrongdoing in consenting to the order.
Regulators contend that the GE Capital Retail Bank exploited consumers by not taking adequate steps to ensure they understood the terms of the credit cards that they obtained to help cover the costs at doctors and dentists around the country.
In many instances, health providers told patients that the CareCredit cards would provide interest-free financing for a year, according to regulators. But the charges could only be avoided if the entire amount was paid within a year after the charge. If an outstanding balance remained at the end of the one-year grace period, interest accruing at a rate of nearly 27 percent was then tacked on to the bill.
"Medical debt is already a big problem for many Americans," said Richard Corday, director for the Consumer Financial Protection Bureau, in a statement. "Poor credit card transparency should not be making the problem even worse."
GE Capital Retail Bank spokeswoman Dori Abel said CareCredit has one of the highest customer satisfaction levels in the industry, with about 60 percent of customers deciding to charge additional bills on their cards. CareCredit agreed in June to provide more information about its deferred-interest plans as part of a settlement reached with New York Attorney General Attorney General Eric Schneiderman.
General Electric last month announced plans to spin off its consumer finance division in an initial public offering next year.