Consumers Union: Discover Settlement with FDIC, CFPB sends strong message that “watchdogs are on the job”
Monday, September 24, 2012
Discover penalized for deceptive marketing; Consumers eligible for refunds do not need to take further action
Pamela Banks, senior policy counsel for Consumers Union, said, “It sends a strong message that this kind of bad behavior isn’t going to be tolerated. The watchdogs are on the job. Consumers can feel good about the fact that someone’s out there, helping put a stop to these kinds of rip-offs.”
In a statement released today, FDIC and CFPB said their joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.
Discover is expected to provide credit or refunds to those who purchased the products in question without further action needed by the affected customers.
FDIC and CFPB said Discover’s telemarketing scripts often used language implying that certain products were additional free “benefits,” when they were actually products for which a fee would be applied to their accounts. The agencies said the company also misled customers about whether they had paid for products, enrolled some consumers without their consent, and withheld material information about whether people were actually eligible for certain benefits.
Under today’s order, FDIC and CFPB said Discover has agreed to stop deceptive marketing, pay restitution, submit to an independent audit, and pay a $14 million penalty.
More information about today’s action available is from the FDIC and CFPB here and here.