On Thursday, September 21, 2012 Discover Bank put out a press release stating they had reached an agreement to settle complaints that the financial institution customarily pressured credit card customers to purchase expensive add on products often by deceit. Hence, Discover Financial Services announced that its subsidiary, Discover Bank, has reached an agreement in principle with the Federal Deposit Insurance Corporation (FDIC) and Consumer Financial Protection Bureau (CFPB) to resolve previously disclosed matters related to the marketing of certain credit protection products sold by telephone. Though the agreement is subject to final approval by both regulatory agencies, the institution will refund more than $200 million back to customers in recent settlement.
“We have worked hard to earn the loyalty of our cardmembers, and we are committed to marketing our products responsibly,” said David Nelms, chairman and chief executive officer of Discover. “As always, we will continue to strive to deliver the highest standards of customer service and satisfaction.”
The agreement requires the company to provide refunds of approximately $200 million to cardholders who purchased the products by telephone from December 2007 to August 2011 and calls for certain enhancements to the company’s marketing practices. The company will pay an additional $14 million in civil monetary penalties to be split between the FDIC and the CFPB.
Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America’s cash rewards pioneer, and offers home loans, private student loans, personal loans, online savings accounts, certificates of deposit and money market accounts through its direct banking business. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation’s leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discoverfinancial.com.