Discover to refund $200 million for deceptive telemarketing

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Snowman
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Discover to refund $200 million for deceptive telemarketing

Postby Snowman » Mon Sep 24, 2012 6:36 pm

Discover Bank has agreed to refund $200 million to more than 3.5 million cardholders over claims of deceptive telemarketing.


The Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation announced the agreement Monday, following a joint investigation that found Discover's telemarketing and sales strategies misled consumers. In addition to refunding customers, Discover Bank, a subsidiary of Discover Financial Services, will pay a $14 million penalty that will be split between the two regulators.


The agencies said Discover telemarketers used deceptive language to convince cardholders to pay for additional products like payment protection, identity theft protection and credit score tracking.


"Discover's telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product," the CFPB and FDIC said in a statement. "Discover's telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed."


As a result, many customers were unaware they were going to be charged for one of these "add-on" products or they were enrolled without their consent, the regulators said.


"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, in a statement about the agreement.


The $200 million will be given to cardholders who purchased credit protection products over the phone from December 2007 to August 2011. The amount each customer receives depends on what the product was, when it was purchased and how long the customer had it for. Customers will be refunded at least 90 days' worth of fees they were charged for the products, and the refunds will be automatically credited to their accounts.


Discover has also agreed to make changes to its telemarketing practices to put a stop to deceptive sales tactics, and its compliance will be subject to audit, the CFPB and FDIC said.


The settlement comes on the heels of the CFPB's first public enforcement action taken in July against Capital One. The CFPB announced that Capital One would refund $140 million to customers and pay an additional $25 million penalty, also for using deceptive marketing tactics to mislead cardholders into buying extra products.

Discover to refund $200 million to customers for deceptive telemarketing - Yahoo! Finance
Bank Of America: BankAmeriCard Cash Rewards-4.2k
Citi: Forward-4.5k American Airlines Advantage Platinum Select World Elite MasterCard 9/6/15-4K
Discover: More-7k
Amex BCE.2k- Amex SPG-5k
Chase: Freedom-5kSouthwest Rapid Rewards Plus- 3.6k
Capital one: Venture one-10,000, Visa Signature.


jeffysdad
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Postby jeffysdad » Tue Sep 25, 2012 6:50 am

These things are a ripoff: payment protection, identity theft protection and credit score tracking.

Payment protection is insurance whose beneficiary is your lender, but you pay the premiums on it.

Identity theft protection might be a comfort to some, particularly those who are too busy to monitor their credit report quarterly, but it is not necessary for those willing/able to exercise a modest amount of vigilance.

The credit score tracking services don't provide your "real" credit score (the one potential lenders might use). They provide a hybrid. Additionally, if your credit reports are clean -- and you can check these for free -- then who cares what your hybrid credit score is? Finally, services that will give you a "hybrid" credit score for free can be a decent proxy, at least for the direction your credit score is going.

It's telling that Discover and CapOne apparently decided to resort to deception in order to move these "products."
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

FutureBillionaire
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Postby FutureBillionaire » Tue Oct 02, 2012 3:36 pm

jeffysdad wrote:These things are a ripoff: payment protection, identity theft protection and credit score tracking.

Payment protection is insurance whose beneficiary is your lender, but you pay the premiums on it.

Identity theft protection might be a comfort to some, particularly those who are too busy to monitor their credit report quarterly, but it is not necessary for those willing/able to exercise a modest amount of vigilance.

The credit score tracking services don't provide your "real" credit score (the one potential lenders might use). They provide a hybrid. Additionally, if your credit reports are clean -- and you can check these for free -- then who cares what your hybrid credit score is? Finally, services that will give you a "hybrid" credit score for free can be a decent proxy, at least for the direction your credit score is going.

It's telling that Discover and CapOne apparently decided to resort to deception in order to move these "products."



You hit the nail on the head here.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

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FastSRT8
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Postby FastSRT8 » Tue Oct 02, 2012 6:09 pm

Seem like Amex has joined in on this 'deceptive' behavior. IF the reports are true, I'm pretty sad Amex decided to promise people $300 credits for signing up for a card and then not giving the cash reward as promised.

Someone will lose their job on this.
Carpe diem quam minimum credula postero!



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