Capital One Makes a 'Creepy' Mistake

Tickers in this article: COF HSBC

NEW YORK ( TheStreet) -- Capital One can be a little annoying at times, especially when you receive multiple credit card offers from the lender over the course of just a few days. But the company suffered from a lapse in judgment when it recently sent updated credit card agreements to its customers, and its attempt to stifle an outcry has so far been pathetic. 

While the updated credit card agreement didn't contain much in the way of new information on the company's collections practices, the language was alarming in some ways, and may have been subject to greater scrutiny by some customers brought aboard when Capital One purchased HSBC's U.S. credit card portfolio in 2012.

The Los Angeles Times on Monday described the terms of Capital One's updated credit card agreement as "creepy," since the new agreement includes language saying the company can make collection efforts by contacting a customer "in any manner we chose," including a "personal visit."

The bank made clear it could visit you at home or even at your place of work, when trying to persuade you to pay your late bill.

"The police need a court order to pull off something like that. But Cap One says it has the right to get up close and personal anytime, anywhere," according to the Los Angeles Times article.

Really? Maybe the newspaper has a point that visiting a customer at work is a bit extreme, but nobody needs a court order to visit your home. After all, salespeople make unexpected visits to homes, as do Jehova's Witnesses.

In my experience in mortgage loan servicing at a community bank, collectors will call peoples' homes, call their neighbors for advice on how to contact the borrower, make personal visits, and do pretty much anything they can to make contact with the borrower. This is because the contact can lead to positive results for the lender, even if the borrower has been trying to avoid contact.

"You're being very polite, so I am going to pay my bill this month. That's all I'm asking for, a bit of respect. If you were rude, I would certainly not pay the bill." This is what a mortgage loan customer who was late (but not very late) on her bill said to me once. I waived the late fee, and also learned a great deal, all in one call. Some customers have to be called each month just to get them to make the payment. And you have to ask nicely. And it's worth it.

Getting back to Capital One, the company seems to have blundered in saying in the new credit card agreement, "We may modify or suppress caller ID and similar services and identify ourselves on these services in any manner we choose."