Discover Bank has agreed to refund some of its customers $200 million and pay fines of $14 million based on its use of decpetive telemarketing tactics. Discover Bank came to this settlement after being investigated by the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance (FDIC).
The majority of the allegations of deceptive marketing practices stem from practices used to induce existing Discover Card customers into purchasing addtional credit protection products. From about December of 2007 until August 2011, Discover is accused of using misleading representations to induce customers into purchasing credit protection services. In particular, Discover is said to have used certain scripts that "contained misleading language likely to deceive consumers about whether they were actually purchasing a product." The majority of these scripts presented the products as free benefits to an account when in reality they cost an addtional fee.
The average refund is expected to be around $57. Refund amounts will vary depending on how long each customer kept the credit protection product. Additionally, Discover will pay a $14 million civil penalty to the CFPB, will cease to deceptive practices and will submit to an independent audit.
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