Alleges Credit-Card Campaign 'Misleads Consumers'

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NEW YORK (AdAge.com) -- The Minnesota attorney general has charged two subsidiaries of Capital One Financial Corp. with false advertising, consumer fraud, and deceptive trade practices in their marketing.

According to a lawsuit filed Dec. 30 in

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Ramsey County district court, commercials from Capital One Bank and Capital One F.S.B. are "simply false" and "mislead consumers, have the tendency and capacity to deceive consumers or the likelihood to create consumer confusion or misunderstanding as to the interest rate on the credit card."

TV, direct mail and telemarketing
In addition to TV advertising, state prosecutors allege the marketer's direct-mail solicitations omit or inadequately disclose that Capitol One's "fixed-rate" credit cards are not fixed-rate, while telemarketing scripts contribute to the "tendency and capacity to deceive consumers, or the likelihood of consumer confusion and misunderstanding, that interest rates on Capital One cards are 'low' and 'fixed.' "

The state maintains there is no fixed rate on Capital One cards. It is seeking to prevent Capital One and its subsidiaries from making such claims in addition to the return of all profits earned from the ads as well as monetary restitution for all injured parties.

A spokeswoman for Capital One said the company has fully cooperated with the attorney general's investigation and believes it has acted properly and in full compliance with the law. She noted that the investigation has been going on for some time and that "Capital One regrets that the AG has chosen to proceed with this lawsuit, but intends to continue to cooperate and work with the AG's office to resolve the matter."

Marauding Vikings
The suit cites three different TV ads for Capital One's No-Hassle credit card. Some ads mention a specific interest rate of 4.99%. "Catapult," one of the ads mentioned, features two men dining at a sidewalk cafe. When the meal ends, one of the men offers to pay using his credit card, saying it offers a "really low rate." His companion counters, "I hope it's a low and fixed rate like my Capital One No-Hassle card." Puzzled by the low-and-fixed combination, the first man asks, "What's going to happen to my rate?" when marauding Vikings storm the area -- the marketer's long-playing metaphor for rising interest rates.

The ads end with the tagline "What's in your wallet?"

The suit alleges the company's disclaimers -- "terms subject to change without notice" or "this offer assumes the account will be kept in good standing" -- at the end of each ad are unreadable and "their substance does not meaningfully alert consumers to the use of penalty-rate or change-in-terms pricing."

Ad agency changes
Capital One, one of nation's largest credit-card issuers, in mid-December split with Interpublic Group of Cos.' McCann Erickson Worldwide, its creative agency since mid-2003, and moved the account without a review to Omnicom Group's DDB Worldwide and Element 79, both in Chicago. The marketer had hired McCann after a review sparked by Publicis Groupe's decision to close Capital One's previous agency, D'Arcy Masius Benton & Bowles, following the Bcom3 Group merger.

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