Disputing fraudulent Discover fees (1 Viewer)

[Dickie Dunn]

I have a Discover card that I had been keeping mainly for emergencies because of its higher limit. It normally had a small balance and I had it on autopay, so I really hadn't been paying much attention to it (I know, not smart, but ...).

Within the last year, I did end up using the card for a couple of major purchases, and that's when I started to discover (ha!) the "Payment Protection PPD" fee showing up in greater and greater amounts on my statements.

I did a little digging and found out that, essentially, Discover had been "deceiving" people into signing up for this service, and that most people had it as far back as 2009. Here's a story about how the FDIC and Consumer Financial Protection Bureau investigated and came down hard on Discover, forcing to pay millions in restitution.

I called Discover last week and got connected to a Payment Protection rep, told them that I wanted to cancel and dispute all past charges. In no time, I was told that I would be refunded for all fees back to the date I allegedly "signed up" in 2009 (seems this was a common theme for many people, based on what I've read). I had been charged more than $500 just since the start of the year, based on my higher balances in that time.

Today I got my statement and all of it was refunded already. But I see that I also am still being charged for Wallet Protection and Identity Theft, two of the other "deceptive" services mentioned in the above story. I plan to call them again to get these removed, as well.

My question, before I call them again is ... can I safely assume that I also was being charged interest on these fees, based on the fact that they were part of my balance? And that I should be able to dispute that, as well? (I assume I could figure out how much per month, based on the APR).

On another note, I also noticed that my FICO score got bumped down this month, and that one of the factors mentioned is "high balances on revolving accounts." (I also have credit inquiries for my home purchase and a refi within the last 18 months.) Do I have any recourse for disputing the fact that the higher balance is adversely affecting my credit score?

Thanks for any info ... and hopefully, any other FBGs can check to make sure they're not being fraudulently charged as well.

 

[Mrs. Rannous]

Sorry I can't answer your question, but I will suggest dropping Discover like a hot rock. We dropped them when they started harrassing us because we have an unusual last name. Someone else with the same last name owed them money, and they kept calling us for that resaon alone. Different account number, different name, different state. No matter to them. If our name had been Smith, they would never have done that.

So stick it to them.

 

[eoMMan]

Hmmm, I've been a very happy Discover customer for many years and never had that fee you are referring to.

Good luck.

 

[RUSF18]

If I'm following right, your "high balances" negative ding isn't going to be from $500 in Discover fees, so I don't think you will have recourse there.

 

[FUBAR]

Hmmm, I've been a very happy Discover customer for many years and never had that fee you are referring to.

Good luck.

same.

the only "harrassment" we've ever had from discover is when my wife was declined use of her card when we first moved to Alabama. Seems they didn't like that we had charges online (Amazon), in NC (I was still there in the morning), SC (my gas), TN (her gas) and AL (she arrived a day ahead of me) because we were taking different routes to move (long story). The computer triggered something as fraudulent. I'd call that reasonable and the company protecting itself and us.

 

[Mad Cow]

Plus, if you pay the balance off each month, there never would have been interest accrue, so that is not an issue.

 

[Chadstroma]

Your credit score would not be impacted by fees on the card.

To give you an idea of the 'factors'.... I happened to check mine this morning. One of the negative factors was that my newest account was too recent. Likewise, on of the positive factors as that I had no new accounts established. The formulas are very complex and very vague in giving 'factors'.

If you having been carrying a lot more on balances on credit vs what you have available, then yes, it will impact you.

 

[Fat Nick]

Hmmm, I've been a very happy Discover customer for many years and never had that fee you are referring to.

Good luck.

Same. I recall being offered the Protection you mentioned years ago. I declined it and that was the end of it.

They've consistently been one of the two or three companies that I use for various services that I really don't have a single complaint about.

Customer service is exceptionally good in my recollection. Had a fraud notice just this past Tuesday, but it was my wife making a big donation I wasn't aware of. Got a text from Discover before my wife could text me to tell me she was making the donation. I called Discover and it was cleared up within 5 minutes tops.

 

[Dickie Dunn]

Your credit score would not be impacted by fees on the card.

To give you an idea of the 'factors'.... I happened to check mine this morning. One of the negative factors was that my newest account was too recent. Likewise, on of the positive factors as that I had no new accounts established. The formulas are very complex and very vague in giving 'factors'.

If you having been carrying a lot more on balances on credit vs what you have available, then yes, it will impact you.

True, that's why I was warned during the mortgage process to keep my balances reasonable, not open any new lines of credit, etc. So I was surprised to see this show up on my most recent credit report, along with a five-point drop (I've been able to pinpoint past drops to bank credit checks, etc., but my score had been rising again in recent months). With more than $500 in fees this year now part of my overall balance, doesn't every little bit count? But anyway, just a shot in the dark on that one.

But I am more curious about the interest accrued. I never paid my card completely down ... just was paying minimums, so I always had a balance and always was accruing interest. Like I said, it wasn't much until recently, but it seems it was always something.

Thanks for the help.

 

[Chadstroma]

Your credit score would not be impacted by fees on the card.

To give you an idea of the 'factors'.... I happened to check mine this morning. One of the negative factors was that my newest account was too recent. Likewise, on of the positive factors as that I had no new accounts established. The formulas are very complex and very vague in giving 'factors'.

If you having been carrying a lot more on balances on credit vs what you have available, then yes, it will impact you.

True, that's why I was warned during the mortgage process to keep my balances reasonable, not open any new lines of credit, etc. So I was surprised to see this show up on my most recent credit report, along with a five-point drop (I've been able to pinpoint past drops to bank credit checks, etc., but my score had been rising again in recent months). With more than $500 in fees this year now part of my overall balance, doesn't every little bit count? But anyway, just a shot in the dark on that one.

But I am more curious about the interest accrued. I never paid my card completely down ... just was paying minimums, so I always had a balance and always was accruing interest. Like I said, it wasn't much until recently, but it seems it was always something.

Thanks for the help.

My educated guess is that the fees did acrue interest as 'you bought' the products offered (though you did not apparently). But I can't say with any authority on way or the other.

The amount of the fees could drop you a few points but it is more an individual thing. The formula does not look at $X of balances hurts you but rather a percentage of use versus available. The higher your available then the less a $500 would impact you. The lower your available then the higher it would. So, for example, someone with an aggregate of $50K available revolving line credit would most likely not see a difference but someone who has only $1K would see a significant movement down on the credit score. For the 'average' customer $500 shouldn't impact your credit score much if at all.

Even if it did- there is nothing that they will do other than refund the fees and have that change in reporting help your score moving forward. There is no recourse on past credit impact unless Discover decides to give you a credit as a customer service issue- though I would be doubtful about that happening even if you pressed for it.

 

[Chadstroma]

BTW- if you are not happy with Discover and want to move away from them but like the 5% rebate set up, PM me as I would have options for you.

 

[Juxtatarot]

Your credit score would not be impacted by fees on the card.

To give you an idea of the 'factors'.... I happened to check mine this morning. One of the negative factors was that my newest account was too recent. Likewise, on of the positive factors as that I had no new accounts established. The formulas are very complex and very vague in giving 'factors'.

If you having been carrying a lot more on balances on credit vs what you have available, then yes, it will impact you.

True, that's why I was warned during the mortgage process to keep my balances reasonable, not open any new lines of credit, etc. So I was surprised to see this show up on my most recent credit report, along with a five-point drop (I've been able to pinpoint past drops to bank credit checks, etc., but my score had been rising again in recent months). With more than $500 in fees this year now part of my overall balance, doesn't every little bit count? But anyway, just a shot in the dark on that one.

But I am more curious about the interest accrued. I never paid my card completely down ... just was paying minimums, so I always had a balance and always was accruing interest. Like I said, it wasn't much until recently, but it seems it was always something.

Thanks for the help.

If the higher balance due to the $500 did impact your credit score, it's only temporary. Once your new balance less the $500 is reported to the credit bureaus (could take a month), the score should go back up (everything else being equal). You aren't penalized for what your credit card balances used to be in earlier months.

Edit: regarding the interest, I suspect your normal rights to dispute most of this stuff has expired since you didn't inform them timely after getting your periodic statement. If you can get an interest credit, it would be due to that FDIC/cfbp ruling or voluntarily from Discover. Regardless, it doesn't hurt to ask.

 

[sbonomo]

I started to discover (ha!) the "Payment Protection PPD" fee showing up in greater and greater amounts on my statements.

can I safely assume that I also was being charged interest on these fees, based on the fact that they were part of my balance?

Do I have any recourse for disputing the fact that the higher balance is adversely affecting my credit score?

I don't think you know what fraudulent means. I am sure that you were given an agreement that may or may not have been predetory but i don't think that constitutes fraud does it? Also, who in the heck actually signs up for those scams? I guess a sucker is born every minute. Yes you would have been charged interest on the entire balance of the credit card. I am sure, since you were lucky enough to get a refund, they will refund any interest charged (it was probably already included) on the protection programs. For the second bolded part, what fantasy world do you live in where you think they are at fault for your credit card balances. Within your description, you noted that you had made several large purchases. Not to be rude, but it sounds like you need to take a basic financial class.

 

[Dickie Dunn]

Thanks a lot, that's helpful.

Like I said, it was more a shot in the dark on the credit score, but no big deal. At this point, I'm more interested in finding out if there is any way I can recover interest paid on these "charges" that I did not authorize and have been piling up on my card (even if in small amounts at times) for more than six years.

 

[Dickie Dunn]

I started to discover (ha!) the "Payment Protection PPD" fee showing up in greater and greater amounts on my statements.

can I safely assume that I also was being charged interest on these fees, based on the fact that they were part of my balance?

Do I have any recourse for disputing the fact that the higher balance is adversely affecting my credit score?

I don't think you know what fraudulent means. I am sure that you were given an agreement that may or may not have been predetory but i don't think that constitutes fraud does it? Also, who in the heck actually signs up for those scams?

I'm not sure the FDIC or CFPB agree with you ...

The joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.

And to the tune of $200 million? Sounds like a lot of people "signed up" for these scams, whether they knew it or not.

Like I said ... shame on me for not realizing this sooner. Not really concerned about the credit score, I just was throwing it out there.

 

[sbonomo]

Madoff, enron, mci worldcom were fraud. This is not.

 

[Dickie Dunn]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

 

[SacramentoBob]

There's no Discover card worth having.

 

[sbonomo]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

Tax on the stupid? This is the same thing as people complaining that banks screwed people on home loans. listen stupid, if you have an interest-only, negative amortization, daily floating rate you are taking some risk and you may lose your home. Same thing here. I am sure they told you that if you have a balance they are going to charge you a percentage of that balance for whatever service they are providing. Much different than fraud - for instance Madoff. He told people that he was investing their money when in reality he was paying off old money with new and using the balances as a personal piggy bank. That is fraud.

 

[Chadstroma]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

Deceptive practices would be the term used by regulators.

 

[Chadstroma]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

Tax on the stupid? This is the same thing as people complaining that banks screwed people on home loans. listen stupid, if you have an interest-only, negative amortization, daily floating rate you are taking some risk and you may lose your home. Same thing here. I am sure they told you that if you have a balance they are going to charge you a percentage of that balance for whatever service they are providing. Much different than fraud - for instance Madoff. He told people that he was investing their money when in reality he was paying off old money with new and using the balances as a personal piggy bank. That is fraud.

Well....

I only vaguely remember this Discover issue.

But, there are some pretty darn right nasty ways people without a morals or a heart end up selling stuff in ways that just is not right. Sometimes this is just an individual thing and sometimes it ends up being organizational.

As an example.... "Hey, I see you don't have our great payment protection plan set up. It is a great service that we offer to you as one of our best customers to protect you in case you can't make a payment. Would you like to be protected today?" No mention of cost or fees etc. Now, sure, people ought to ask questions but not everyone is on top of things. It doesn't mean they should be taken advantage of.

 

[saintfool]

Thanks a lot, that's helpful.

Like I said, it was more a shot in the dark on the credit score, but no big deal. At this point, I'm more interested in finding out if there is any way I can recover interest paid on these "charges" that I did not authorize and have been piling up on my card (even if in small amounts at times) for more than six years.

if you didn't carry a balance for these fees then you aren't going to have interest applied. setting up autopay protected you from that.

 

[Fat Nick]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

Tax on the stupid? This is the same thing as people complaining that banks screwed people on home loans. listen stupid, if you have an interest-only, negative amortization, daily floating rate you are taking some risk and you may lose your home. Same thing here. I am sure they told you that if you have a balance they are going to charge you a percentage of that balance for whatever service they are providing. Much different than fraud - for instance Madoff. He told people that he was investing their money when in reality he was paying off old money with new and using the balances as a personal piggy bank. That is fraud.

Well....

I only vaguely remember this Discover issue.

But, there are some pretty darn right nasty ways people without a morals or a heart end up selling stuff in ways that just is not right. Sometimes this is just an individual thing and sometimes it ends up being organizational.

As an example.... "Hey, I see you don't have our great payment protection plan set up. It is a great service that we offer to you as one of our best customers to protect you in case you can't make a payment. Would you like to be protected today?" No mention of cost or fees etc. Now, sure, people ought to ask questions but not everyone is on top of things. It doesn't mean they should be taken advantage of.

Yeah...I actually agree with sbonomo that this really isn't fraud, but it's a slippery slope with how you deal with it.

On one hand, financial companies have an obligation to disclose what they're doing, what the fees are, etc. On the other hand, the consenting customer has an obligation to understand what they are signing up for. I feel like the prior almost always happens. I feel like the latter happens only sometimes. When I had my cell phone stores, it shocked me the number of times (90%+) people just signed whatever I put in front of them without reading any of it. READ THE CONTRACT FOLKS. If you don't understand it, ask questions....ask someone to explain it to you.

Part of the problem, and the reason why people who aren't financially educated enough to understand why something isn't a good deal get taken advantage of is that they're basically shamed into not asking questions. It's OK to not understand it. I'm educated, work in finance, and have lots of experience in that sector...I still sometimes come across contracts that I have to read and re-read to understand. Companies could do a better job making contracts easier to understand, but "simple" and "legally strong" are typically in conflict.

If you don't understand it, ask a question. If you come across someone who doesn't understand, don't make them feel like an idiot for not understanding.

 

[Fat Nick]

Thanks a lot, that's helpful.

Like I said, it was more a shot in the dark on the credit score, but no big deal. At this point, I'm more interested in finding out if there is any way I can recover interest paid on these "charges" that I did not authorize and have been piling up on my card (even if in small amounts at times) for more than six years.

if you didn't carry a balance for these fees then you aren't going to have interest applied. setting up autopay protected you from that.

If he's carrying a balance, he's likely not the "autopay" type. Not a jab at the OP, just a statement.

The single biggest piece of financial advice that anyone can give is "if you can't pay off your credit card bill 100% every month, don't buy things on a credit card." It's a financial black hole.

 

[Chadstroma]

Madoff, enron, mci worldcom were fraud. This is not.

What word would you use instead, if fraud is too harsh?

Tax on the stupid? This is the same thing as people complaining that banks screwed people on home loans. listen stupid, if you have an interest-only, negative amortization, daily floating rate you are taking some risk and you may lose your home. Same thing here. I am sure they told you that if you have a balance they are going to charge you a percentage of that balance for whatever service they are providing. Much different than fraud - for instance Madoff. He told people that he was investing their money when in reality he was paying off old money with new and using the balances as a personal piggy bank. That is fraud.

Well....

I only vaguely remember this Discover issue.

But, there are some pretty darn right nasty ways people without a morals or a heart end up selling stuff in ways that just is not right. Sometimes this is just an individual thing and sometimes it ends up being organizational.

As an example.... "Hey, I see you don't have our great payment protection plan set up. It is a great service that we offer to you as one of our best customers to protect you in case you can't make a payment. Would you like to be protected today?" No mention of cost or fees etc. Now, sure, people ought to ask questions but not everyone is on top of things. It doesn't mean they should be taken advantage of.

Yeah...I actually agree with sbonomo that this really isn't fraud, but it's a slippery slope with how you deal with it.

On one hand, financial companies have an obligation to disclose what they're doing, what the fees are, etc. On the other hand, the consenting customer has an obligation to understand what they are signing up for. I feel like the prior almost always happens. I feel like the latter happens only sometimes. When I had my cell phone stores, it shocked me the number of times (90%+) people just signed whatever I put in front of them without reading any of it. READ THE CONTRACT FOLKS. If you don't understand it, ask questions....ask someone to explain it to you.

Part of the problem, and the reason why people who aren't financially educated enough to understand why something isn't a good deal get taken advantage of is that they're basically shamed into not asking questions. It's OK to not understand it. I'm educated, work in finance, and have lots of experience in that sector...I still sometimes come across contracts that I have to read and re-read to understand. Companies could do a better job making contracts easier to understand, but "simple" and "legally strong" are typically in conflict.

If you don't understand it, ask a question. If you come across someone who doesn't understand, don't make them feel like an idiot for not understanding.

I agree it is not considered fraud but rather the correct term used is "deceptive practices". The CFPB is very concerned with this and it really seems to be their focus.

Yes, I would say 90% of the people don't read what they are signing even in a bank. Sometimes they don't even wait for me to explain what it is that they are signing. All my loans, they don't read but that is mostly because I point out that they have a three day right to recission which gives them the time to look over everything and make sure it is as I say it is and otherwise I just point out a few highlights on the docs. Now, I have integrity and only do business when it is helpful to people- so I don't have any problems that come up but it is interesting how trusting people are.

You pointed out that people are not financially literate and that is absolutely true. I think it is one of the bigger failings of our educational system. It is assumed that parents or guardians will instruct personal finance and even basic things like how a checking account works. On a daily basis I have to educate and explain things to people. Sometimes it is the most basic of concepts to grown adults who seemingly otherwise function perfectly well in life. A number of people have misconceptions or misunderstandings. It makes it easy for people that are otherwise lacking in ethics to do things that make it easier to 'sell' and are not 'fraud' but also are hiding things, intentionally not disclosing things or otherwise fooling people into doing something that they may not do if they knew the whole picture. Should people have a higher degree of personable responsibility- absolutely. At the same time, it does not give a free pass to scum who play the 'deceptive practices' game to take advantage of people.