Capital One Financial (COF) has set aside an additional $75 million in its reserve in the first quarter of 2012, saying some of its salespeople did not adhere to its practices in trying to sell additional products to credit card customers.
“We have policies and scripts in place to ensure that our sales practices meet our standards. And unfortunately, this didn't happen in some cases with respect to the sale of some cross-sell products at Capital One,” Chief Executive Richard Fairbank told analysts during an earnings conference call on Thursday evening.
“So what we're doing is we are reaching out to all the customers who purchased these products over the past couple of years and offering a refund to those customers. This is a one-time $75 million hit that we're taking for that effect. But it's very important that we make sure that all of our customers have bought the products in the context that we exactly intended when we were selling them,” he added.
The company posted a profit of $1.4 billion, up 38% from a year earlier. Excluding the impact of a bargain purchase gain related to the ING Direct acquisition, Capital One earned $809 million.
A company spokeswoman would not provide further detail about the refund or the products involved.