Discover Bank, The Student Loan Corporation, and Discover Products, Inc.
On December 22, 2020, the Bureau issued a consent order against Discover Bank, The Student Loan Corporation, and Discover Products, Inc. (collectively, Discover). Discover Bank, headquartered in Greenwood, Delaware, is an insured depository institution that provides and services private student loans. The Student Loan Corporation and Discover Products, Inc., are affiliates of Discover Bank, and also engage in student loan servicing. The Bureau previously issued a consent order against Discover in July 2015 (2015 Order). The Bureau’s 2015 Order was based on, among other things, the Bureau’s finding that Discover misstated the minimum amounts due on billing statements and tax information consumers needed to get federal income tax benefits. The Bureau found that Discover violated the 2015 Order’s requirements in several ways. Discover misrepresented the minimum loan payments consumers owed, the amount of interest consumers paid, and other material information, such as interest rates, payments, and due dates. Discover also did not provide all of the consumer redress the 2015 Order required. The Bureau also found that Discover engaged in unfair acts and practices by withdrawing payments from consumers’ accounts without valid authorization and by cancelling or not withdrawing payments without notifying consumers. This conduct violated the Consumer Financial Protection Act of 2010 (CFPA), the Electronic Fund Transfer Act, and Regulation E. The Bureau also found that Discover engaged in deceptive acts and practices in violation of the CFPA by misrepresenting minimum payments consumers owed and the amount of interest consumers paid. The consent order requires Discover to pay at least $10 million in consumer redress and a $25 million civil money penalty and contains requirements to prevent future violations.
Consumer Financial Protection Bureau Settles with Student Loan Servicers Discover Bank, The Student Loan Corporation, and Discover Products, Inc. for Violating a Bureau Consent Order and Other Unlawful Practices