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Banks have been accused of ripping off consumers for insurance-like credit card products. Now critics who say the payment protection plans are a racket could get a boost from federal regulators.
February 6 -
Discover Financial Services is anticipating a joint enforcement action from the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau over the marketing of its credit card payment protection products, the company disclosed in a regulatory filing posted late Thursday afternoon.
January 26
New York — Discover Financial Services, which is facing a government probe over its marketing of credit card insurance-like products, believes its relatively new practices will appease regulators, a top executive said on Thursday.
"We believe practices we've been operating under at least for the last six months are the direction regulators will want to go" in, Discover chief operating officer Roger Hochschild said Thursday at a Keefe, Bruyette & Woods conference on cards, payments and financial technology.
He did not elaborate on those practices. Discover disclosed last month that it was
The credit card company posted $241 million in revenue on the products in the fiscal year ended Nov. 30, 2011.
Discover had alluded to changes to its practices in earlier regulatory filings.
"Before the FDIC's and the CFPB's review began, Discover Bank made changes to both its fee-based products and program, and Discover Bank believes its current business practices substantially address the regulators' concerns," the company said in its latest 10-K report filed Jan. 26.
Hochschild told the audience he could not estimate the financial impact of the government probe.
But he confirmed that the government is so far
When asked during the presentation if it was accurate that the CFPB only has "a problem with the marketing... not with the fee structure of the products," Hochschild simply responded, "Yes."
