The attorney general of Minnesota, on Monday, files a lawsuit which accused Discover Financial Services of deceptive marketing which tricked consumers into buying products that were optional, in order to protect them from financial hardships, wreaked by fraud. According to the lawsuit, Discover has made telemarketing calls that were deceptive, misleading and aggressive. Discover Financial Services is amongst the biggest credit card issuers in the country. They have been accused of signing up customers for identity theft protection and credit score tracking too, through deceptive marketing strategies.
According to the complaint, cardholders have been told that the company was not trying to make a sale and the call was out of courtesy. Quite a few customers were signed for these financial products and were later charged on their credit cards without being informed. According to the lawsuit some of the credit card customers were made to replay in affirmative to benign statements, unaware of the marketing strategy being used through the phone call. An investigation has now been initiated following many complaints from card holders in Minnesota.
Officials from Discover Financial Services have meanwhile abstained from commenting on the policy, although some of them were of the opinions that the company policy wouldn`t allow them to sell products that would negatively affect the relationship with customers. According to a statement, some card members indeed find the products of Discover offering card protection precious, as they give them peace of mind. Discover, on account of its efforts to maintain long term relationships with the customers has been able to enjoy the greatest loyalty from customers over 13 years, compared to other credit card issuers. Meanwhile this lawsuit didn`t seem to have any sort of effect on the stock price of Discover which closed on Monday, at 19.04 dollars up by 20 cents.
Discover ha reported 1.3 billion dollars in profit last year while 295 million dollars were earned from these type of products. Protection from identity theft is charged at 12.99 dollars while 89 cents for every 100 dollars of outstanding balance, per month is the cost of another product which allows card holders to defer payments on their credit card outstanding balance in case of sudden disability or loss of job. The lawsuit has also reported that DFS services, an affiliate company of Discover for processing had called customers to check if they understood all benefits of the credit card, but in the process signing up some of the customers for a fee based scheme.