As a result of an enforcement action the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) filed against Discover Bank, the sixth largest U.S. credit card issuer, Discover Bank agreed to refund approximately $200 million to more than 3.5 million consumers. They were also ordered to pay a $14 million penalty. The agencies jointly investigated Discover’s telemarketing and sales practices and found that the company engaged in deceptive tactics to sell its credit card add-on products—payment protection, credit score tracking, identity theft protection, and wallet protection.
As reported in the joint press release, Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. Also, Discover telemarketers often downplayed key terms and rushed through the part of the call in which prices and terms were disclosed. According to the FDIC and the CFPB, because of the misleading wording 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
withheld material information about eligibility requirements for certain benefits.
Under the enforcement action order, Discover has agreed to stop deceptive marketing, pay restitution to consumers who purchased the products, provide refunds or credits without any further action by consumers, submit to an independent audit, and pay a $14 million penalty.
Consumers who, without their knowledge, were charged for one or more of the products between December 1, 2007 and August 31, 2011 will receive restitution. Consumers are not required to take any action to receive the refund.
For more information you can trust, see