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Discover Card Pays Deceptive Marketing Penalty
The Consumer Financial Protection Bureau has posted a press release on a joint enforcement action with the FDIC against Discover Card and Discover Bank. The story broke last week after Discover Card admitted to investors that it, like Capital One previously, had been caught allegedly charging consumers for what every consumer advocate considers useless, over-priced ($6-16/month or more) junk credit insurance or debt cancellation ("who will pay your credit card if you die, get sick, get laid off?") and credit monitoring add-ons ("stop identity theft!") that consumers didn't actually buy, but still were billed for on their credit card bills. Discover Card has agreed to pay a $14 million civil penalty to the CFPB and FDIC, plus refund over $200 million to ripped-off consumers. After the CFPB and another regulator, the OCC, dinged Capital One in July for similar alleged practices, we noted that "more credit card banks quit evil ways," as other banks got out of the tawdry biz.
From the CFPB: The 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.[...] 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; [...] Misled about whether they had purchased the products; [...] Enrolled without their consent; [and...] Withheld material information about eligibility requirements for certain benefits.
As in the Capital One case, Discover victims will get automatic refunds. They don't need to do anything.
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