Discover Gets a CFPB Smackdown
Earlier this year, the Consumer Financial Protection Bureau (CFPB) delivered a smack down to Capital One. More specifically, they made CapOne refund nearly $150M to consumers and $60M in fines.
Well, just this week they struck again. This time the target was Discover. The penalty? $200M in refunds to 3.5M customers — and average of almost $60 per affected customer — plus $14M in penalties payable to the FDIC and the CFPB. They’re also being required to change their marketing practices.
Why are they being punished? Because they engaged in shady sales tactics related to their credit-protection products. According to the CFPB, they:
“determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products.”
For their part, Discover says the settlement was to:
“resolve previously disclosed matters related to the marketing of certain credit protection products sold by telephone.”
The refunds cover a period spanning late 2007 through mid 2011 and related to products including credit monitoring services, ID theft protection, and payment-protection programs.
According to the complaint, Discover reps implied that the services were free benefits, skipped over details regarding costs and program terms, and even signed people up without their consent.
No wonder the banks fought so hard against the creation of the CFPB. It used to be the fox watching the hen house. Now there’s at least an impartial entity keeping an eye on things.
Disclaimer: Discover is a paid advertiser of this site.
Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
Filed under: Banking, Credit Cards
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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3 Responses to “Discover Gets a CFPB Smackdown”
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September 28th, 2012 at 6:39 pm
Nice to see a government agency funding itself like this. Once the CFPB can’t fund itself (everyone is playing by the rules), then we won’t need the CFPB anymore.
October 1st, 2012 at 9:18 am
I remember Discover trying to sell my a bunch of identity and credit protection whenever I would call customer service. I would always ask them, “Why are you trying to sell me something you are required by law to do?” “These are additional coverages”. It always seemed suspect. Now I know why.
October 1st, 2012 at 10:55 am
This will do nothing but increase the costs/decrease the benefits of CCs! Thanks government oversight!