Sept. 25, 2012 – The FDIC and the Consumer Financial Protection Bureau announced a joint enforcement order Monday against Discover, forcing the megabank to pay a $200 million consumer refund for "deceptive marketing" to more than 3.5 million credit card customers, as well as a $14 million civil penalty.
The announcement marks the end of a year-long investigation into Discover’s telemarketing and sales tactics that the agencies say "misled" consumers into paying for credit card "add-on products." The services included credit score tracking and identity theft, wallet and payment protection. The agencies said Discover implied that the products were free.
Customers who were charged for one or more of the products between Dec. 1, 2007 and Aug. 31, 2011 will be sent a notice about the refund from Discover, the agencies said. Those customers will receive varying refund amounts depending on the products they purchased and how long they held them.
In addition, Discover will be required to make certain changes to its telemarketing of these products. Discover must also submit a compliance plan to the FDIC and CFPB for approval, and take specific corrective actions related to the products. An independent auditor will report to the FDIC and the CFPB on Discover’s compliance with the joint FDIC-CFPB Consent Order.
The civil penalty that Discover must pay will be split evenly between the U.S. Treasury and the CFPB's Civil Penalty Fund.
This is the second major action announced by the CFPB this year. On July 18, the bureau announced a $210 million settlement with Capitol One after charging that it deceived customers into buying payment protection and credit monitoring.
The full text of the Joint FDIC-CFPB Consent Order with Discover is available online.
A factsheet on the Consent Order is also available to view online