WASHINGTON
(AP) -- Discover Bank will pay millions in fees to settle accusations by
regulators that it pressured credit card customers to buy costly add-on
services like payment protection and credit monitoring.
Discover,
the sixth-biggest U.S. credit card issuer, will pay a $14 million fine
and refund $200 million directly to more than 3.5 million customers,
federal authorities said Monday.
The company's
call-center workers enrolled customers in the programs without their
consent, misled them about the benefits and left customers thinking the
products were free, regulators said.
The
action was brought by the new Consumer Financial Protection Bureau and
the Federal Deposit Insurance Corp. Discover said this summer that it
expected an enforcement action about add-on products.
It
is only the third public enforcement action by the consumer bureau,
which was created under the 2010 financial overhaul law to protect
consumers from excessive or hidden fees and other financial threats. The
first was a similar order against Capital One, another big issuer of
cards.
American Express also expects to pay
refunds and fines related to add-on products, according to its most
recent quarterly filing with regulators.
Discover
is part of Discover Financial Services. In a statement late Friday,
chairman and CEO David Nelms said: "We have worked hard to earn the
loyalty of our cardmembers, and we are committed to marketing our
products responsibly."
Discover's
telemarketing scripts included misleading language that confused
consumers about whether they were buying a product or just agreeing to
consider it, the agencies said. They said telemarketers spoke quickly
during the part of the call where the prices and terms of products are
described.
The order mentions four products
sold by Discover: Payment Protection, Credit Score Tracker, Identity
Theft Protection and Wallet Protection. Anyone who paid for those
services between Dec. 1, 2007, and Aug. 31, 2011, will be repaid at
least 90 days' worth of fees. About 2 million customers will be repaid
all of the fees they were charged.
In addition
to the refunds and fine, Discover agreed to change its telemarketing
approach and employ an independent auditor to oversee its compliance
with the order.
Copyright 2012 by The Associated Press. All rights reserved.
