Consumer complaint received 2023-01-08
Company: CAPITAL ONE FINANCIAL CORPORATION
State: LA
Product: Credit card or prepaid card
Sub-product: Store credit card
Issue: Improper use of your report
Sub-issue: Reporting company used your report improperly

Complaint:
On XXXX XXXX the Executive Officer of Kohls XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX informed me that his company was not removing a kohls/Capital One account from my consumer credit reports XXXX, XXXX, and XXXX after I investigated the company for violating the Fair Credit Reporting Act in CFPB case : XXXXToday I have additional Laws and regulations the company violated. The first one is The Gramm-Leach-Bliley. Financial institutions covered by the Gramm-Leach-Bliley Act must tell their customers about their information-sharing practices and explain to customers their right to " opt out '' if they don't want their information shared with certain third parties. Is your company following the requirements of the Privacy Rule? KOHLS CARDMEMBER AGREEMENT does not list this information for the consumer required by federal law. I was never explained or given the option to opt out of my account information being shared with third parties such as the consumer reporting agencies XXXX, XXXX, and XXXX. In addition the company violated the FEDERAL TRADE COMMISSION TRADE REGULATION RULE CONCERNING THE PRESERVATION OF CONSUMERS ' CLAIMS AND DEFENSES regulations. The following notice is not listed in the Kohl 's Card Agreement to collect any debt from me. [ Source : 42 Fed. Reg. 19490, XX/XX/1977 ; as amended at 42 Fed. Reg. 46510, XX/XX/1977, effective for all consumer credit contracts taken or received by sellers after XX/XX/1977 ] PURPOSE OF THE RULE In adopting this Rule the Commission determined that it constitutes an unfair and deceptive practice within the meaning of Section 5 of the Federal Trade Commission Act ( 15 U.S.C. 45 ) for a seller, in the course of financing a consumer purchase of goods or services, to employ procedures which make the consumer 's duty to pay independent of the seller 's duty to fulfill his obligations. In the course of public proceedings of the Rule the Commission documented numerous cases where consumer purchase transactions were financed in such a way that the consumer was legally obligated to make full payment to a creditor despite breach of warranty, misrepresentation, and even fraud on the part of the seller. Under ordinary contract law, the promises of the parties to a sale transaction are mutually dependent. A seller is entitled to payment provided he delivers what he promised to deliver. If the seller fails to deliver what was promised, the consumer 's obligation to pay may be reduced or even eliminated. However, it is possible for a seller to arrange credit terms for buyers which separate the consumer 's legal duty to pay from the seller 's legal duty to keep his promises. This separation of duties may be accomplished in three ways. First, the seller may execute a credit contract with a buyer which contains a promissory note. In the event that the promissory note is assigned to a credit company, the credit company takes it free of any claim or defense which the buyer would have against the seller. This is true unless the buyer can prove that the credit company is acting in bad faith or with notice of actual seller misconduct. Second, if a local statute prohibits the use of such promissory notices in credit sale transactions, the seller may incorporate a written provision called a " waiver of defenses '' in the text of an installment sales agreement. A waiver of defenses is the consumer 's written agreement that his installment purchase contract may be treated like a promissory note in the event that it is sold or assigned to a credit company.

Finally, a seller may arrange a direct loan for his buyer. Where a seller arranges a loan in this fashion, the lender is legally entitled to payment in full whatever the seller may do or fail to do in the sales transaction which accompanies the loan and for which the loan is obtained. In jurisdictions where efforts have been made to curtail the use of promissory notes and waivers of defenses, the Commission documented a significant increase in the use of arranged loans to accomplish the same end.

The Commission 's Rule is directed at all three of the above situations. It is designed to prevent the widespread use of credit terms which compel consumers to pay a creditor even if the seller 's conduct would not entitle the seller to be paid. It is designed to preserve the consumer 's legally sufficient claims and defenses so that they may be asserted to defeat or diminish the right of a creditor to be paid, where a seller who arranges financing for a buyer fails to keep his side of the bargain. 

MECHANISM OF THE RULE The Rule is designed to insure that consumer credit contracts used in financing the retail purchase of consumer goods or services specifically preserve the consumer 's rights against the seller. It requires sellers to include the following provision, or Notice, in the text of any consumer credit contract which they execute with a buyer : ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. 

In addition, if a seller arranges direct loan financing for his customers, the Rule prohibits the seller from accepting the proceeds of the loan as payment for a sale, unless any loan contract signed by the buyer and the direct lender contains the following provision : ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. 

Based on this finding I owe no debt and Kohl's/Capital can't collect any debt or payment from me the consumer because it's not in the Kohls card member contract agreement. I've attached the Kohls 's card member agreement below.

Company response to consumer: Closed with explanation