(NEW YORK) — Discover Bank, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced Discover will make a $200 million consumer refund for “deceptive marketing” to more than 3.5 million credit card customers.
The agencies conducted a year-long investigation into telemarketing and sales tactics that they said “misled” consumers into paying for credit card “add-on products.” The agencies said Discover implied that the products were free.
The services included credit score tracking and identity theft, wallet and payment protection.
Customers who are eligible for a refund were charged for one or more of the products between Dec. 1, 2007 and Aug. 31, 2011. The agencies said customers will receive a notice from Discover Bank, which is a subsidiary of Discover Financial Services (stock symbol: DFS), based in Riverwoods, Ill.
Those customers will receive varying refund amounts depending on the products they purchased and how long they held them, the two government agencies announced.
All consumers will receive at least 90 days’ worth of fees paid, minus any refunds they have already received. About 2 million consumers will receive full refunds of all of the fees they paid.
The company is not admitting wrongdoing by agreeing to the settlement. A spokesman for Discover declined to comment further.
In addition to the $200 million refund to consumers, Discover has agreed to pay a $14 million civil penalty, which will be split evenly between the U.S. Treasury and the CFPB’s Civil Penalty Fund.
The FDIC said it became aware of concerns about the sale and marketing of the add-on products in 2010.
Discover announced in its quarterly filing for the second quarter of 2011 that it was under investigation by the FDIC. The investigation later merged with the one by the CFPB.
This is the second major action announced by the CFPB this year. On July 18 a $210 million settlement was announced against Capitol One after it was discovered that they deceived customers into buying payment protection and credit monitoring.
Copyright 2012 ABC News Radio
Shannon Gupta, CNN
Madison Park, CNN
Matt McFarland, CNN