Capital One targeting charged off accounts for new interest payments

Capital One recently began sending new credit card bills to consumers who had long since defaulted on their accounts, according to a report in the Los Angeles Times. In one case, a person who had $2,000 in credit card debt charged off more than a decade ago recently received a bill for nearly $5,200. This is because the company continued to compound interest on the account even after it was technically written off.

The company said the effort is part of its attempts to become compliant with the Credit Card Accountability, Responsibility and Disclosure Act, which mandates that lenders send statements for defaulted accounts that are still accumulating interest.

Typically, these accounts would have sold defaulted credit card debt to a collections agency, but these companies have no ability to actually add to a consumer's debt total, as a lender might.