Discover Credit Card Ordered to Pay $200 Million Consumer Refund for Deceptive Marketing

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By Consumers Union on Monday, September 24th, 2012

The CFPB just announced that the credit card company Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011. The FDIC and CFPB issued a joint action against Discover is a result of an investigation that found for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection were deceptive.

Among the other findings:

Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product.  Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed.  Because of the misleading language in the scripts and the actions of Discover’s telemarketers, consumers were:

 

  • Misled about the fact that there was a charge for the products: Discover’s telemarketing scripts often used language implying that the products were additional free “benefits,” rather than products for which a fee would be applied to their accounts.

 

  • Misled about whether they had purchased the products:  The telemarketing scripts frequently suggested that consumers would not be charged for the products until after having a chance to review printed materials from Discover.  Discover, however, did not provide consumers with the information until after Discover had already initiated the consumer’s purchase of a product.

 

  • Enrolled without their consent: Discover representatives processed the add-on product purchases without some consumers’ consent.  These consumers were then charged for the product on their Discover card.

 

  •  Withheld material information about eligibility requirements for certain benefits: Discover’s telemarketers typically did not disclose critical eligibility requirements for certain payment protection benefits, such as exclusions for pre-existing medical conditions and certain limitations concerning employment.

If you were a Discover customer consumers who was charged for one or more of the products between December 1, 2007 and August 31, 2011 you should receive 90 days worth of the fees you paid. The amount will vary depending on when and how long you paid the fee for. Approximately 2 million Discover customers will receive a full refund for the fees that they paid.

Here is the full FDIC-CFPB joint decision

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