WASHINGTON D.C. – The Consumer Financial Protection Bureau (CFPB) has ordered GE Capital Retail Bank and its subsidiary, CareCredit, to refund up to $34.1 million to potentially more than one million consumers who it said were victims of deceptive credit card enrollment tactics. At doctors’ and dentists’ offices around the country, consumers were signed up for CareCredit credit cards they thought were interest free, but were actually accruing interest that kicked in if the full balance was not paid at the end of a promotional period, the agency’s statement said.

CareCredit offers personal lines of credit for health care services, including dental, cosmetic, vision, and veterinary care. Doctors, dentists and other medical providers and their office staff, such as office managers and receptionists, are the primary sellers of the product, offering it as a payment option for their patients. The product is sold by more than 175,000 enrolled providers across the country. There are about 4 million active CareCredit cardholders.

Approximately 85 percent of CareCredit borrowers are placed in a deferred-interest financing plan, the CFPB’s statement said. Under this “no interest if paid in full” plan, consumers make monthly payments while CareCredit assesses 26.99 percent annual interest on a consumer’s balance throughout a promotional period, which can range from six to 24 months. If any portion of the balance has not been paid when the promotional period ends, the consumer becomes liable for all of the accrued interest.

According to the CFPB order, since January 2009, consumers who signed up for the credit card frequently received an inadequate explanation of the terms. Many consumers, most of whom were enrolled while waiting for health care treatment, incurred substantial debt because they did not understand how they could have avoided deferred interest, penalties, and fees.

The CFPB’s order requires that GE Capital Retail Bank and CareCredit create a $34.1 million reimbursement fund. Consumers who incurred charges in connection with their credit cards will be notified by CareCredit that they may file a claim seeking reimbursement. Claims will be reviewed by an independent adjudicator. More than 1.2 million consumers will have access to this independent review process and the reimbursement fund. The company will pay all expenses related to the administration of the fund. CareCredit is also required to enhance the disclosures provided to consumers during the application process and on billing statements. CareCredit providers are required to follow the new transparency principles including mandatory staff training for those who market the CareCredit card to consumers.

In response to queries from VMail, a spokesperson for CareCredit said, “CareCredit consistently enjoys some of the highest customer satisfaction ratings in the industry and high repeat usage of the program, with 60 percent of transactions coming from existing cardholders. We worked cooperatively with the CFPB on this inquiry and are committed to providing more education for providers who offer our program and enhanced consumer disclosures.

“There are some procedures for applications that are limited only to some dental and audiology providers. Cardholders who meet the criteria for filing a claim will be sent a claim form from us within the next 120 days. We will distribute transparency principles to all CareCredit providers, including vision care providers, early next year. These transparency principles will also be automatically incorporated into the provider’s program agreement with us upon their continued acceptance of the CareCredit program. It’s important to note that many of these protections have been part of the CareCredit program for years.”

The spokesperson added, “We take our responsibility to provide an excellent experience very seriously and look forward to continuing our focus on providing access for millions of consumers to non-emergency health care, vision care and veterinary services across a network of 175,000 providers. As always, cardholders with any questions about their account, should call us at the number on the back of their card or on their statement.”