GE Capital Retail Bank and CareCredit LLC, its
subsidiary, have agreed to a settlement that requires new protections for
consumers who use CareCredit, a health care credit card that can carry an
interest rate of more than 26 percent.
Settlement terms
The agreement requires a “cooling-off” period to
give consumers an opportunity to consider the card’s terms and the treatment
plan, a limit to what the provider can charge in advance, and transparency
requirements to make consumers aware of high interest rates if the charge isn’t
paid off at the end of the promotional period, said New York Attorney General
Eric T. Schneiderman.
Consumer complaints
An investigation began after hundreds of
consumers complained of problems related to CareCredit.
GE Capital Retail Bank issues the CareCredit card
and contracts with health care providers who offer the card to their patients
as a way for patients to finance the cost of treatment. GE pays the health care
providers in full within 48 hours of the charge. About 65 percent of CareCredit
cardholders apply for the card while they are in a provider’s office.
The investigation found that the application
process is often rushed and occurs when treatment is set to begin.
Consumers reported being pressured into applying
for CareCredit and charged the full amount for treatment in advance of
receiving services. In many cases, providers failed to inform consumers of the
basic terms of the CareCredit card and represented that CareCredit had “no
interest,” when it carried retroactive interest of 26.99 percent if not paid in
full during a promotional period. Other consumers were led to believe that they
were signing up for an in-house, no-interest payment plan directly with their
provider or a line of credit with 0 percent interest. Consumers who did
complain often encountered difficulty in obtaining refunds.
GE and CareCredit is the largest issuer of
consumer health care financing in the nation, with about 160,000 providers
offering it nationwide.
Of the 90 percent of CareCredit consumers who
choose the "no-interest-if-paid-in-full" promotion, about 25 percent
end up paying a 26.99 percent interest rate, when the promotional period ends.
That’s because too often consumers aren’t given clear information about the
terms of the financing and how to avoid paying the interest, Schneiderman said.
Refunds or credits
The New York Attorney General’s Office estimates
that the appeals process may result in refunds or credits of up to $2 million
to about 1,000 consumers whose complaints to GE or CareCredit were rejected.
Under the agreement, GE will send out notices to
these cardholders to let them know about their right to appeal.
