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Discover Ordered To Refund $200 Million

Transfer balances for free and get 0% APR for 12 monthsIf you’re one of the millions of Discover credit card holders who purchased one of its dubious credit protection products, you’re in for a refund.

The federal government has ordered Discover to refund about $200 million to 3.5 million consumers who purchased add-on products between Dec. 1, 2007, and Aug. 31, 2011.

A joint investigation from the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau found that Discover misled consumers about the cost of its services and what they covered. The deceptive sales tactics were used to sell payment protection, credit score tracking, identity theft protect and wallet protection products.

From the FDIC announcement:

“Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed.”

In the end, according to the FDIC, many consumers were unsure if they’d be charged for the products, were enrolled without their consent or weren’t told about eligibility requirements for its payment protection benefits.

If any of this sounds familiar, the feds in July slapped Capital One with a huge penalty for similar shenanigans.

We said it then, but it’s worth repeating here. These add-on products the credit card companies sell aren’t worth anywhere near what they cost. Some are practically worthless.

And while these government investigations haven’t commented on the usefulness of the products themselves, the result is still a win for consumers. People who have been misled are receiving some justice.

If you’re a Discover customer and you purchased any of these products, you’ll receive a credit to your account. If you no longer own a Discover credit card, you’ll receive a check in the mail.

Refunds will vary based on when and for how long a cardholder kept an add-on product, according to the FDIC. The only customers who won’t receive a refund are those who made use of the payment protection service, which allows consumers to stop paying their credit card for up to two years in case of job loss, hospitalization or other “qualifying life events.”

Discover also was ordered to halt deceptive marketing and pay $14 million in penalties to the federal government.

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