Feds Order Discover to Refund $200 Million to Cardholders

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Discover cardBy DANIEL WAGNER, AP Business Writer

WASHINGTON (AP) - Discover Bank (DFS) will pay millions in fees to settle accusations by regulators that it pressured credit card customers to buy costly add-on services like payment protection and credit monitoring.

Discover, the sixth-biggest U.S. credit card issuer, will pay a $14 million fine and refund $200 million directly to more than 3.5 million customers, federal authorities said Monday.

The company's call-center workers enrolled customers in the programs without their consent, misled them about the benefits and left customers thinking the products were free, regulators said.

The action was brought by the new Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. Discover said this summer that it expected an enforcement action about add-on products.

It is only the third public enforcement action by the consumer bureau, which was created under the 2010 financial overhaul law to protect consumers from excessive or hidden fees and other financial threats. The first was a similar order against Capital One, another big issuer of cards.

American Express also expects to pay refunds and fines related to add-on products, according to its most recent quarterly filing with regulators.

Discover, part of Discover Financial Services, did not immediately respond to a request for comment. Under the settlement, the company neither admitted nor denied the allegations.

Discover's telemarketing scripts included misleading language that confused consumers about whether they were buying a product or just agreeing to consider it, the agencies said. They said telemarketers spoke quickly during the part of the call where the prices and terms of products are described.

The order mentions four products sold by Discover: Payment Protection, Credit Score Tracker, Identity Theft Protection and Wallet Protection. Anyone who paid for those services between Dec. 1, 2007, and Aug. 31, 2011, will be repaid at least 90 days' worth of fees. About 2 million customers will be repaid all of the fees they were charged.

In addition to the refunds and fine, Discover agreed to change its telemarketing approach and employ an independent auditor to oversee its compliance with the order.


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Optimum

The one who will benefit the most will be the Feds! I'm glad they did it, though.

September 25 2012 at 9:41 PM Report abuse rate up rate down Reply
Optimum

The one who will benefit the most will be the Feds! I'm glad they did it, though.

September 25 2012 at 9:40 PM Report abuse rate up rate down Reply
PowellTreeCare

OMG - they did this exact same thing to me. I got a call from a Discover representative who had such a thick accent that I could hardly understand him. He kept telling me that this service was "free". I agreed, based upon it being free. I reiterated that multiple times. A couple of months later when I called to question the charges on my statement, I was told that I agreed to pay for this protection. I protested and told them that they had scammed me because I only agreed to the service if it was free. They promised to "go back through the tapes", and they would let me know. Of course, they decided that they were justified in the charges. They took me for over $700. I told them that I would never use the card again, although I would pay it off. Well, I haven't ever used the card again, and that was around 5 years ago. I had better be due a discount too.

September 25 2012 at 6:29 PM Report abuse rate up rate down Reply
PowellTreeCare

OMG - they did this exact same thing to me. I got a call from a Discover representative who had such a thick accent that I could hardly understand him. He kept telling me that this service was "free". I agreed, based upon it being free. I reiterated that multiple times. A couple of months later when I called to question the charges on my statement, I was told that I agreed to pay for this protection. I protested and told them that they had scammed me because I only agreed to the service if it was free. They promised to "go back through the tapes", and they would let me know. Of course, they decided that they were justified in the charges. They took me for over $700. I told them that I would never use the card again, although I would pay it off. Well, I haven't ever used the card again, and that was around 5 years ago. I had better be due a discount too.

September 25 2012 at 6:28 PM Report abuse rate up rate down Reply
PowellTreeCare

OMG - they did this exact same thing to me. I got a call from a Discover representative who had such a thick accent that I could hardly understand him. He kept telling me that this service was "free". I agreed, based upon it being free. I reiterated that multiple times. A couple of months later when I called to question the charges on my statement, I was told that I agreed to pay for this protection. I protested and told them that they had scammed me because I only agreed to the service if it was free. They promised to "go back through the tapes", and they would let me know. Of course, they decided that they were justified in the charges. They took me for over $700. I told them that I would never use the card again, although I would pay it off. Well, I haven't ever used the card again, and that was around 5 years ago. I had better be due a discount too.

September 25 2012 at 6:28 PM Report abuse rate up rate down Reply
efat53yz

now this pisses me off,,, pay my balance every month,,,, never an interest charge or a late fee,,,, and i dont get a dime,,,

September 25 2012 at 3:39 PM Report abuse rate up rate down Reply
arenadood

I have had no problems with either my BofA or Discover credit cards.I have had them a long time with no complaints.

September 25 2012 at 11:46 AM Report abuse rate up rate down Reply
arenadood

I have had no problems with either my BofA or Discover credit cards.I have had them a long time with no complaints.

September 25 2012 at 11:45 AM Report abuse rate up rate down Reply
Haifa

people will get 2 and 3 dollars back , and the CEO'S and the lawyers will pocket the big money ..

September 25 2012 at 11:43 AM Report abuse rate up rate down Reply
Haifa

people will get 2 and 3 dollars back , and the CEO'S and the lawyers will pocket the big money ..

September 25 2012 at 11:43 AM Report abuse rate up rate down Reply