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.

Commentary

The only way to stop these types of abuses is to call them out and to hold the banks accountable.

For more on consumer protection issues, follow Andy Spears

Writer and policy advocate living in Nashville, TN

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