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Discover Card & Capital One Pay Settlements for Telemarketing Fraud

Published October 16, 2012 by

Discover Card & Capital One Pay Settlements for Telemarketing FraudLate last month, a settlement was reached in a lawsuit between Discover Card and the Consumer Financial Protection Bureau and the FDIC. Discover Card had been charged by federal regulators and consumers of fraudulent business practices.

In the federal regulators’ investigation, they discovered that the credit card company’s telemarketers would use ambiguous and vague language when introducing credit card customers to Discover Card’s various programs. Often, these telephone marketing strategies would employ the technique of speaking quickly so as to become unintelligible.

Often, fast speech was used when discussing the fees and terms and conditions of Discover Card programs. In addition to deliberately unintelligible speech, telemarketers gave a false impression to customers of these Discover Card products and programs being free and delivering certain benefits, which ultimately, was understood to be far from the truth.

These Discover Card programs included payment protection, credit score monitoring, identity theft protection, and the like. In their investigation, it became clear to federal regulators that, without the approval of their customers, Discover’s telemarketers were often adding these programs and various other fees attached to them onto their customers’ credit card statements.

As a result of employing such deceptive marketing strategies, Discover Card will pay a fine to the Consumer Financial Protection Bureau and the FDIC in the amount of $14 million. Approximately 3.5 million Discover Card customers will receive recompense in the amount of $200 million for the losses incurred via enrollment in these fraudulent credit programs. It is estimated that about 2 million customers will receive compensation for all fees charged by Discover over the period of December 7, 2007 through August 31, 2011.

Moreover, Discover Card has agreed that it will reform its telemarketing strategy. Also, the credit card company has agreed to hire a nonpartisan auditor whose responsibility it will be to insure that Discover Card does not engage in fraudulent and misleading marketing tactics.

Back in July of this year, Capital One settled a similar lawsuit regarding claims filed against the credit card company and their deceptive telemarketing strategy. The Capital One settlement amounted to $150 million to compensate two million of their customers. In addition to the consumer recompense, Capital One paid the Consumer Financial Protection Bureau a fine of $25 million. Furthermore, the credit card company agreed to pay another fine in the amount of $35 million due to the Office of the Comptroller of Currency.

If you feel that you have been the victim of such unfair and deceptive trade practices, contact a consumer protection lawyer at Carey Danis & Lowe.