She's not imagining things
You really can get 5% cash back at Sephora.com and about 200 other online retailers with the new Discover it card
[imga=Sephora discount on ShopDiscover"]http://creditcardforum.com/images/cards/misc/discover/sephora-shopdiscover.png[/imga]
That cash back is on top of the 1% you already earn, so it's actually even higher than that. I have this card myself and use it quite a bit for online shopping to get these discounts.Go here to see my review of this rewards program
As far as there ever being a Sephora credit card, I have not heard any talk of that but will be sure to update this thread if that ever changes in the future.