Discover to refund $200 million to credit card customers
The Consumer Financial Protection Bureau is at it again, smacking down another credit card company for deceptive marketing practices.
In July, the new federal watchdog agency reached a $210 million settlement with Capital One.
This time it’s forcing Discover to refund $200 million to more than 3.5 million customers and pay a $14 million penalty to the government.
By my quick calculations, it looks like Discover customers who qualify for a refund will receive an average of between $50 and $60.
According to a joint investigation between the FDIC and the CFPB, Discover used misleading telemarketing scripts to get customers to sign up for add-on services — things like payment protection, credit score tracker and identity theft protection.
These are products that almost every credit card company offers, but Discover got into trouble because of the way it sold them.
The investigation found that it sales staff implied the services were free or that customers could take advantage of an introductory period during which they could drop the services at no charge.
Neither was the case.
The investigation also found that Discover's telemarketers weren't giving all necessary information about the products (like leaving out eligibility requirements for some payment protection plans) and enrolling customers without their consent.
Discover will pay restitution to those who were charged for one of these products from Dec. 1, 2007, to August 31, 2011.
If you're still a Discover customer and bought one of these products, you'll get a credit added to your account.
If not, you'll be mailed a check.
As these things usually go, Discover is not admitting that it did anything wrong. In a statement, Discover chairman and CEO David Nelms said that Discover is "committed to marketing our products responsibly."
You're better off not taking his word for it.
If you're ever called by any of your credit card companies about an add-on, you can flat out say “no” (which I recommend because these kinds of services are rarely worth it), or ask the person for a web address where you can review the information more carefully.
Keep an eye on your credit card statements. If anything fishy shows up from the card issuer, ask what it is and to have it removed if it's a mistake.
Finally, if you have any problems with your credit cards, especially something like this, report it to the CFPB. These kinds of settlements wouldn't happen without consumer data submitted to the agency.