As part of a joint enforcement action with the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, Discover Card will pay more than 3.5 million consumers approximately $200 million.
All consumers who were charged for one or more add-on products between December 1, 2007, and August 31, 2011, will receive restitution. Discover, during that time period, allegedly marketed payment protection as a product allowing consumers to place payments on hold for as long as two years in the event of unemployment, hospitalization or other qualifying life events.
Discover was found to have used deceptive telemarketing tactics in selling products, utilizing misleading language and fast-talking telemarketers.
“This is the second action that the bureau has taken, in coordination with a fellow regulator, to address the deceptive marketing of credit card add-on products,” CFPB Director Richard Cordray said. “We have also published a compliance bulletin to put other institutions more specifically on notice that such tactics are illegal and should be halted. We continue to expect that more such actions will follow. In the meantime, we are signaling as clearly as we can that other financial institutions should review their marketing practices to ensure that they are not deceiving or misleading consumers into purchasing financial products or services.”