Discover Card Pays Deceptive Marketing Penalty

Discover Card has paid a $14 million civil penalty to the CFPB and FDIC, plus refunded over $200 million to ripped-off consumers, in the latest case involving useless, junk credit insurance and credit monitoring add-ons that consumers didn't buy-- but paid for.

Consumer alerts

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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Authors

Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

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