Discover ordered to return fees for pressuring credit cardholders

The new Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation have brought their third public enforcement action to help repay hundreds of millions of dollars to credit cardholders, including those in Mississippi. The bureau brought the action against Discover Bank for misleading and pressuring credit card customers. Now, those in Mississippi and elsewhere will get some relief from their credit card debt. Consumers will also learn from this story that it is not always their own actions that lead to credit card troubles.

The bureau was established under the 2010 financial laws to protect consumers from financial threats. One recent threat identified by the bureau was allegedly caused by Discover. The bureau claims that Discover telemarketing workers reached out to credit card customers and enrolled them in programs without their consent and misled them about benefits, allowing customers to believe that certain benefits and products were free. To settle these allegations, Discover has agreed to pay a $14 million fine and over $200 million directly as a refund to about 3.5 million consumers.

directly as a refund to about 3.5 million consumers.

Discover is not the only credit card company engaging in such alleged consumer tactics either. The bureau also claims that Capital One and American Express took part in such actions. As a result, it is imperative that credit cardholders in Mississippi educate themselves on credit card use. Credit cards can be convenient when a consumer faces financial challenges by provide consumers with purchase power and payment flexibility. However, they can also come with unclear and hidden fees and quickly lead to additional financial problems -- like unnecessary credit card debt -- as in the Discover case.

Fortunately, state and federal laws requires certain consumer protections and organizations like the bureau have been established to ensure such protection. Additionally, consumers can seek personal protection and relief through the bankruptcy system. Filing for bankruptcy immediately stops credit card collection efforts and the accumulation of fees.

A consumer certainly has several means by which to combat credit card debt. Becoming familiar with the different options is the first step in combating financial challenges that arise from either credit card companies' tactics, as in the case of Discover, or financial hardships brought on by such issues as medical bills or the loss of a job.

Source: SunHerald, "Feds order Discover to refund $200M to cardholders," Daniel Wagner, Sept. 24, 2012

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