Discover to refund $200m to customers

image captionDiscover paid telemarketers incentives for enrolling customers in the services, regulators said

America's sixth-largest credit card issuer has agreed to pay $200m (£123m) in refunds to settle accusations it misled customers into add-on services.

Discover Bank will also pay a $14m fine, after regulators said it enrolled clients in schemes such as credit monitoring, without consent.

It is the third public enforcement action taken by the Consumer Financial Protection Bureau (CFPB).

More than 3.5 million customers are to receive refunds.

About two million of them will be repaid all the charges against them.

Those incorrectly charged for the add-on services between December 2007 and August 2011 are to be repaid for at least 90 days worth of fees.

The investigation found "Discover's telemarketing scripts contained many misrepresentations, implying that these products were free of charge and simply 'added benefits'," CFPB director Richard Cordray told reporters.

Regulators also found in some cases that telemarketers had been paid incentives to enroll customers in the add-on products, Mr Cordray added.

As part of the settlement, Discover agreed to change its telemarketing approach and employ an independent auditor.

In a statement from its parent company, Discover Financial Services chairman and chief executive David Nelms said the company had "worked hard to earn the loyalty of our cardmembers, and we are committed to marketing our products responsibly".

The CFPB was created in 2010 to protect consumers from hidden fees. Its first enforcement action was a $210m settlement with Capital One Financial in July.

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