Marking the second landmark enforcement action brought by the Consumer Financial Protection Bureau (CFPB) in just two months, the agency today ordered Discover to pay $200 million in consumer refunds for deceptive marketing practices in addition to a fine. The order was brought in conjunction with the Federal Deposit Insurance Corporation (FDIC).
The company is charged with misleading consumers into paying for various “add-on products” in marketing its products and services to customers via phone. In addition to the customer refunds, Discover has also been fined $14 million to be paid half to the CFPB’s civil penalties fund and half to the U.S. Treasury.
“This is the second action that the Bureau has taken, in coordination with a fellow regulator, to address the deceptive marketing of credit card add-on products. We have also published a compliance bulletin to put other institutions more specifically on notice that such tactics are illegal and should be halted,” said CFPB Director Richard Cordray. “We continue to expect that more such actions will follow. In the meantime, we are signaling as clearly as we can that other financial institutions should review their marketing practices to ensure that they are not deceiving or misleading consumers into purchasing financial products or services.”
In July, the agency brought an enforcement action against Capital One, amounting in $150 million in customer refunds, also for deceptive marketing.
In this case, the agency examined telemarketing scripts to find misleading language likely to deceive consumers about whether they were actually purchasing a product, according to the CFPB. The markets were also found to have “downplayed”key terms and to have spoken quickly during the part of the call coving pricing and terms.
Written by Elizabeth Ecker
