Discover To Refund $200 Million To Customers

Discover has agreed to refund customers over claims it engaged in deceptive marketing practices over the phone. The company allegedly got customers to unwittingly pay for add-on services they never ordered. Discover says it's not admitting any wrongdoing with this agreement.

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STEVE INSKEEP, HOST:

Some other news: Discover Financial Services has agreed to refund $200 million to more than three and a half million credit card customers. A federal investigation found the company used deceptive marketing practices. It's one of the first major enforcement actions by the new Consumer Financial Protection Bureau.

NPR's Ailsa Chang reports that Discover allegedly charged customers for add-on services they never ordered.

AILSA CHANG, BYLINE: If you tune into a Discover Card commercial, you'll hear them brag about how they treat their customers.

(SOUNDBITE OF COMMERCIAL)

UNIDENTIFIED MAN: Want better customer service? Switch to Discover. Ranked number one in customer loyalty. It pays to Discover.

CHANG: But the Consumer Financial Protection Bureau has a different take on how Discover treats some of its customers. The Bureau says it's like a beat cop, patrolling banks and credit card companies to make sure they're following consumer laws.

Federal investigators say they listened to loads of phone recordings between telemarketers and Discover customers, and here's what they heard on a lot of those calls.

This is Richard Cordray, the Bureau's director.

RICHARD CORDRAY: Discover's telemarketers spoke unusually fast when explaining the cost and product terms and even processed purchases without the consent of consumers.

CHANG: Investigators say several conversations would go something like this: a telemarketer would ask a customer, wouldn't you like some identity theft protection with your card? The customer would say, yeah, without explicitly agreeing to pay for it. And then the customer would start seeing a charge for 10 bucks a month for that protection. Discover says it's not admitting any wrongdoing with this agreement.

Ailsa Chang, NPR News, New York.

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