Discover Bank Faces $35 Million Penalty for Student Loan Violations
The Consumer Financial Protection Bureau (CFPB) announced last week a $35 million settlement with Discover Bank as a result of Discover’s violation of a previous (2015) consent order.
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, due dates, and the availability of rewards, among other things. Discover also did not provide all of the consumer redress the 2015 Order required.
The Bureau found that Discover engaged in unfair acts and practices by withdrawing payments from more than 17,000 consumers’ accounts without valid authorization and by cancelling or not withdrawing payments for more than 14,000 consumers without notifying them.
These types of violations highlight the harms that can be done when the conduct of Big Banks goes unchecked. Consumers should beware. Student loan debt is especially menacing because it can’t be discharged in bankruptcy. Pay attention to the details. If you notice something odd, notify your lender. If that doesn’t work, contact the CFPB — they can and will help.
The only way to stop these types of abuses is to call them out and to hold the banks accountable.
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