Consumer complaint received 2017-08-07
Company: CAPITAL ONE FINANCIAL CORPORATION
State: WA
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Advertising and marketing, including promotional offers
Sub-issue: Didn't receive advertised or promotional terms

Complaint:
I am writing to file a formal complaint against Capital One Financial Corporation and its subsidiaries ( collectively and individually, " Capital One '' ) and each of the three major credit bureaus ( i.e., XXXX XXXX, XXXX, and XXXX, collectively herein the Credit Bureaus ). I am seeking the prompt relief requested below.
FACTS Among many types of consumer credit products, Capital One offers a secured credit card known as the Capital One Secured MasterCard ( Cap One Secured Card ). This and other secured credit cards are widely known and advertised as credit offerings that, being backed by the consumers account deposit ( s ) with the issuer as collateral, enable consumers with no, limited, or bad credit histories to obtain a credit card and begin building or rebuilding their credit history. This is the specific and advertised purpose of secured credit cards in general and the Cap One Secured Card specifically.
I am between the ages of XXXX and XXXX years of age and do not have a credit history ( i.e., I have never applied for or received any form of credit, debt, or loan ). I have a financial history consisting of checking and savings accounts at a major financial institution, always in good standing ( e.g., I have never been over-withdrawn or incurred any type of fine or penalty ), and I became employed earlier this summer. With my recent employment, I decided that it would be a good time to begin building a positive, responsible credit history.
Because I am a XXXX XXXX, I researched both XXXX and secured credit card products. One card in particular, the Cap One Secured Card, appeared frequently in online searching/advertising and was recommended to me, as a young consumer just beginning to build a credit history, by several online resources, such as XXXX and XXXX 
XXXX discloses that Capital One and others have paid to have their credit card offerings, including the Cap One Secured Card, included in the section entitled Credit Cards for Limited or No Credit History. ( See XXXX XXXX XXXX ).
XXXX displays the Cap One Secured Credit Card ( at the top of the page, in first position ) when the consumer selects : I am looking to : Establish or Build My Credit, What is your credit score? I dont have a score, and What options are you looking for? Secured Credit Cards.
( Note : if the consumer selects all of the above, but a poor credit score of XXXX or less, rather than no score, the Cap One Secured Card appears at the top of the page, as the second offer. ) It follows that Capital One likely pays for this placement, as well.
This is how Capital One describes this credit card in XXXX  search results : Looking to Build Your Credit?
Responsible Card Use Can HelpApply In many other places, Capital One characterizes the Cap One Secured Card as a vehicle to rebuild credit. However, given their other, prolific advertising of this product as being designed for establishing ( new ) credit, use of the word rebuild gives a reasonable consumer the impression that rebuild is Capital Ones shorthand for build/establish or rebuild.
The basic terms of the Cap One Secured Card were appealing to me. Capital One would determine a deposit amount of {$49.00}, {$99.00}, or {$190.00} and provide a credit limit of {$200.00}, which they would increase after five billing cycles ( assuming timely payments and, presumably, no other new negative credit events ). Further, they do not charge an annual fee for this card. The interest rate is, of course, extremely high, but would not apply if each monthly bill is fully paid on time.
Before applying, on or about XXXX XXXX, 2017, my father called Capital One on my behalf, described my situation ( e.g., XXXX XXXX between the ages of XXXX and XXXX years, new job, no prior credit of any kind, banks accounts always in good standing, no debts or bills ) and my primary goal to begin building a positive credit history for the future.
In retrospect, the Capital One representative should have immediately and emphatically warned my father that I would be summarily, automatically rejected by Capital One based on the sole fact that I do not have a credit history and such rejection would result in turning my neutral/empty credit history into a negative credit history. But, she did not.
Rather, during their 20 30 minute conversation, she confirmed that the Cap One Secured Card was indeed designed for consumers such as myself and suggested that I use Capital Ones online prequalification tool to further verify my chances of obtaining the card.
The following day, as suggested by the Capital One representative, I used Capital Ones online prequalification tool. In doing so, I provided my full name, address, date of birth, and full social security number.
Capital One leads consumers to believe that during the prequalification process, it has actually worked with a credit bureau to take a look at your basic credit information. They also say that with respect to any offers that they provide based on this prequalification process, the information [ they ] saw told them that you might be a good potential customer. It 's not a guarantee, but it 's definitely good news if you 're in the market for one. Emphasis added.
A more complete excerpt from Capital Ones website follows : What is pre-qualification?
Simply put, it means that a credit card company worked with a credit bureau to take a look at your basic credit information. They may have set a standard, such as a minimum credit score, and asked for a list of people who met it. Or maybe they gave the credit bureau a list of specific people and asked for a check on their credit.1 Either way, the information the credit card company saw told them that you might be a good potential customer, and that 's why you 're pre-qualified. It 's not a guarantee that you 'll get a new or better credit card, but it 's definitely good news if you 're in the market for one.
See, https : //www.capitalone.com/credit-cards/blog/what-is-prequalification/.
Upon completion of the prequalification process, Capital Ones online system prequalified me for and offered me the Cap One Secured Card. Because I know that I meet or exceed all of their publicly stated requirements ( e.g., over age XXXX, have a checking or savings bank account, my income exceeds my rent/mortgage by more than {$420.00}, I have not previously applied for any credit card, etc. ), I fully believed that I would be approved.
What I did not and could not know and, what Capital One absolutely knows or should have known, was that there would be one criteria that I would not be able to meet that is, my application could not be verified because the Credit Bureaus refuse to provide sufficient credit report information. The reason? According to a XXXX representative, XXXX would not provide my credit information because I do not have a credit history. ( According to Capital Ones denial letter, the same appears to be true with respect to the other credit bureaus. ) However, I am jumping ahead. To return to the timeline Thus, having been persuaded by Capital One that : ( 1 ) this card is intended for my stated purpose of establishing credit for the first time, ( 2 ) they had worked with the Credit Bureaus, and reviewed my basic credit information, and ( 3 ) they offered me the Cap One Secured Card based on all of the foregoing, I accepted their offer and immediately applied for this card on Capital Ones website. Approximately 20 seconds later, their online system summarily and automatically denied my application.
Capital Ones rejection screen offered to enable me to check my credit history through their CreditWise system, presumably allowing me, a rejected applicant, the ability to research possible negative information in my credit report that may have lead to the rejection. However, upon providing Capital Ones CreditWise system all the required, accurate information, their CreditWise system generated an error screen that informed me that my information was unavailable. After trying to access the CreditWise system twice I noticed a small footnote on the initial CreditWise screen that stated that the CreditWise system would be unable to provide me information if XXXX did not make such information available to Capital One. This was my first hint as to what had happened.
My father and I immediately called XXXX and described the situation. Their representative informed us that XXXX would not provide credit information to Capital One because I do not already have a credit history. Then, we began to connect the dots behind this otherwise very opaque system. No credit history = no credit information = rejection for a product marketed specifically to and for consumers without a credit history.
My father and I immediately called Capital One and described the entire situation. The representative looked into my application, but could not find any information on why Capital One rejected my application. He told us that we should wait for the denial letter, which would explain their reasons.
Two days later, I received the rejection letter. The reasons for rejection were : The reason ( s ) for our decision are : Based on your credit report from XXXX, credit bureau information is missing or unavailable Based on your credit report from XXXX, credit bureau information is missing or unavailable Based on your credit report from XXXX XXXX, credit bureau information is missing or unavailable Later that morning, my father and I called Capital One and again spoke with a representative. We explained the entire situation and requested that Capital One either ( a ) take further steps toward approving my application, or ( b ) contact the Credit Bureaus and either have any hard inquiries generated in association with my application for the Cap One Credit Card removed or noted as erroneous. The representative stated that neither she nor Capital One could do either of the foregoing or anything else to help rectify the negative credit history that Capital One had created for me.
We then, on the same call, spoke with her supervisor. After revisiting the entire situation for the third time, he too said that neither he nor Capital One could rectify the problem that they caused, which means that according to this supervisor, Capital One is one of the very few creditors ( perhaps the only creditor ) in the U.S. unable to have the Credit Bureaus correct or change negative information relating to one of Capital Ones inquiries/consumers.
This supervisor ( 1 ) offered to internally pass along our feedback and concerns regarding the marketing of this product by Capital One, as well as the complete disconnect between how Capital One processes applications and how it works with the credit bureaus, and ( 2 ) informed us that because he did not see any of my credit information from the credit bureaus in the Capital One system, that it should not have been considered a hard inquiry and might not have been recorded as such. The supervisor was clear that Capital One could not take any remedial steps to address the injury it caused me. We concluded the call with the collective hope that the application had not generated any such hard inquiry.
Over the next few days, I was able to confirm, much to my dismay, that each of the Credit Bureaus recorded this as a hard inquiry. Not only is the hard inquiry a negative on my credit report and credit score, but, because my credit report does not show a corresponding credit card, it also creates a clear implication that I was denied. Thus, despite my thorough due diligence with Capital One prior to applying for this card, not only do I not have any way to begin building a positive credit history, but my neutral credit history now contains, as its sum total a negative hard inquiry/denial.
Capital One certainly knew that this would be the outcome when my father called their representative for the sole and express purpose of confirming whether the Cap One Security Card would be an appropriate credit card for me and my goal of beginning to build a positive credit history.
Capital One directly and/or indirectly advertises that this card is offered specifically designed for this purpose and, via their online pre-qualification process and also their subsequent application process, encourages consumers who are new to credit to apply for pre-determined, automatic failure and injury. And, Capital One knows the foregone outcome -- credit damage to the applicant -- when they accept the Cap One Secured Card application from a consumer who is seeking to establish credit for the first time.
Yet, rather than provide the consumer with prominent warnings of the impending injury Capital One is about to inflict upon the expectant applicant, the only obscure hint that they provide to consumers of the impending credit damage is four obtuse words in very small type at the bottom of a lengthy screen* through which a consumer must scroll ; that is, the phrase, or can not be verified. And, here too, they fail to warn an unsuspecting, new-to-credit consumer that if the consumer is part of the group for whom this particular product is specifically marketed and allegedly designed ( those seeking to establish credit for the first time ), that consumers history will be unverifiable.
* To find these four obtuse words, the consumer must scroll to nearly the bottom of the Cap One Secured Card product page to find the section entitled Rate and fee information and then scroll approximately half way through a lengthy window, and then find these four words at the end of the first of 22 bullets in the section entitled Additional Disclosures & Terms and Conditions. Then, the consumer must know that which Capital One knows but will not tell him/her, even when directly asked if you do not have a credit history, your credit information will be unavailable and you will be summarily rejected. See, https : //www.capitalone.com/credit-cards/secured-mastercard/.
COMPLAINT On or about the period between XXXX XXXX 2017 and XXXX XXXX, 2017, Capital One and its employee-representatives : ( 1 ) materially misrepresented ( by phone and by online marketing ) the nature, purpose, and requirements of its Cap One Secured Card ; ( 2 ) falsely and improperly prequalified me for the Cap One Secured Card and mislead me to believe that : ( a ) Capital One actually worked with a credit bureau to take a look at [ my ] basic credit information, ( b ) Capital One would provide a logical and non-arbitrary review of the information the Credit Bureaus provided them and only prequalify me if it had good reason to do so based on the information received, and ( c ) because I met or exceeded all of Capital Ones understandable, published criteria, approve my application ; ( 3 ) upon prequalification, improperly offered me the Cap One Secured Card while Capital One knew or should have known that, as a foregone conclusion, it would summarily deny my application ; ( 4 ) improperly denied my application for the Cap One Secured Card solely because the Credit Bureaus refused to or could not provide certain credit history about me ; ( 5 ) knowingly and intentionally injured me by causing my neutral ( limited ) credit history to become a negative credit history ; and ( 6 ) refused to take reasonable steps to remediate the damage that Capital One caused me.
On or about the period between XXXX XXXX, 2017 and XXXX XXXX, 2017, the Credit Bureaus improperly and without reasonable cause refused to provide Capital One with my credit report information. As noted above, according to a XXXX representative, XXXX would not provide this information to Capital One for the sole reason that I do not have a credit history. This creates a system by which someone without credit can not obtain credit. A chicken and egg problem of sorts one in which there can be no chicken because there is no egg and vice versa.
Capital One may certainly make a rational business decision not to provide a credit product to those without a credit history. However, they should not be permitted to, through their representatives, marketing, and processes, mislead consumers who are new to credit and have no credit history into believing that the Cap One Secured Card is actually designed specifically for them ( in addition to those with bad credit ). They should not be permitted to mislead consumers with respect to their prequalification process and its actual bearing on the likelihood of approval or suitability of the products they offer through prequalification. Further, they should not be permitted to work with the credit bureaus in a systematic manner designed to injure such consumers who have been mislead by their advertising and statements. This case is particularly egregious given the additional steps I ( and my father ) took to avoid a negative outcome and the proactive steps Capital One took to dissuade us of any such concerns.
As a result, my credit history, as reported by each of the Credit Bureaus now shows a Regular Inquiry ( aka a hard pull ), which has a negative impact on ones credit score. Further, because Capital One denied my application and thus I have not yet been able to obtain any credit, it is clear from my credit report that Capital One denied my application an action that will only make it more difficult for me to begin building any credit history in the future.

Company response to consumer: Closed with explanation