Discover to Make Refunds to Settle Probe of Credit-Protection Products
Wall Street Journal
September 23, 2012
Johnson, Andrew R.; Tadena, Nathalie
Discover Financial Services will pay $214 million -- about $200 Millie in cardholder refunds and $14 million in penalties -- to settle a federal probe into its sales of credit protection products. The proposed agreement also requires the card company to modify its marketing practices. It is the second pact this year between a credit card company and the Consumer Financial Protection Bureau, following a similar accord two months ago with Capital One Financial. Many other banks have ceased to offer the controversial add-on products, such as protection against identity theft and insurance to cover card payments in the event of a job loss, which consumer advocates say actually provide card users with very little financial benefit. Additionally, customers have said in court cases that marketers have misrepresented the features and costs of the products while, at times, enrolling them in the programs without consent. According to a report last year from the Government Accountability Office, consumers forked out $2.4 billion in fees for credit protection plans in 2009.
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