Major credit card company Discover will be issuing refunds and paying fines to compensation consumers who were misled by telemarketers about account protection services. The credit card company was investigated by consumer protection agencies for marketing practices and disclosures to customers relating to payment protection plans, identify theft protection, and other similar services.
The main problem with the lender’s practices, according to regulators, was that telemarketers did not disclose some of the important terms of the service and when they did inform consumers, spoke very quickly to obscure the information.
Regulators are requiring Discover to issue the refunds in a convenient way to customers, either by reducing their current balance by the refunded amount or by sending them a check if they are no longer customers.
The amounts may be small in some cases, but the presence of stronger regulation for consumer lending companies will hopefully be a major benefit to borrowers. Discover is not the only credit card company that has recently come under scrutiny from the Consumer Financial Protection Bureau. Capital One Bank will also be issuing refunds and paying penalties for misleading marketing practices for the same types of credit card protection services.
For Florida consumers who are already struggling with significant consumer debt or other types of debt, the refunds and revised marketing practices will hopefully make life a little easier. Credit card debt, caused by factors such as sudden job loss or unmanageable payment amounts, is one of the most common reasons that people cite for choosing to file for bankruptcy.
Source: Detroit Free-Press, “Susan Tompor: Discover — touted as the card that pays you back — is paying up after deceptive add-on sal,” Susan Tompor, Sept. 25, 2012