Instead of the usual monthly statement, Discover credit card customers might receive a check in the mail by 2013.
The credit card company was ordered to refund $200 million to 3.5 million customers after the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) joint investigation revealed that Discover used deceptive telemarketing tactics to sell add-on products such as payment protection, credit score tracking, identity theft and wallet protection.
Discover will also be required to pay $14 million in fines, which will be split between the CFPB and the FDIC.
The decision comes on the heels of a similar case CFPB waged against Capitol One in July. The credit card company was required to pay $210 for knowingly soliciting card memberships from financially distressed consumers.
According to the CFBP, Discover telemarketers duped consumers into buying costly services, failed to fully disclose terms, and enrolled and charged consumers without their consent.
According to a CFPB press release, “Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. 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. Discover representatives processed the add-on product purchases without some consumers’ consent. These consumers were then charged for the product on their Discover card.”
Consumers who purchased the fraudulent add-on services will be reimbursed for at least 90 days worth of charges unless they took advantage of the delayed payment service. Refund checks average out to be about $56 per cardholder and are expected to be issued before 2013.