Dec. 6 (Bloomberg) -- Discover Bank telemarketers, selling identity-theft and credit-score monitoring services, fail to tell consumers when they’re agreeing to buy those products, Minnesota Attorney General Lori Swanson said in a lawsuit.
The credit-card company, a unit of Discover Financial Services, reaped more than $300 million in revenue last year from selling those products, Swanson said today in a statement announcing the filing of the suit in state court in Minneapolis.
“It is particularly ironic for credit-card companies like Discover to charge people’s accounts for optional fee-based products without their informed consent because the credit-card company touts its fraud prevention capabilities,” she said.
Discover Bank and Riverwoods, Illinois-based Discover Financial are each named as defendants in the lawsuit, which Swanson said seeks injunctive relief, civil penalties and restitution.
“It’s not in Discover’s interest to sell a product that doesn’t enhance our relationship with our card members,” Matthew Towson, a spokesman for the company, said today in an e-mailed statement.
Towson said many of customers “find Discover’s protection products valuable as they provide peace of mind.” He declined to specifically comment on the attorney general’s allegations.
Swanson said card company callers used oblique questions and omitted disclosure terms when describing products to customers in an effort to sell the offered services.
Some cardholders were “tricked into unwittingly signing up by giving an affirmative response like ‘OK’ or ‘yes’ to a seemingly benign statement or question,” she said.
A copy of the complaint couldn’t immediately be obtained from Swanson’s office or confirmed independently with the court.
Discover Financial rose 18 cents, or 1 percent, to $19.02 in New York Stock Exchange trading at 2:06 p.m.
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