The Federal Deposit Insurance Corporation (FDIC) issued three enforcement orders against Discover Bank, Greenwood, Delaware, requiring corrective action, mandating a restitution plan of at least USD 1.225 billion for adversely affected merchants and related intermediaries, and assessing a USD 150 million civil money penalty. The FDIC found that, for approximately 17 years, the bank misclassified millions of consumer credit cards as commercial, which resulted in higher interchange fees on transactions processed on the Discover network. The misclassification led to merchants being overcharged by more than USD 1 billion in interchange fees. In a concurrent action, the Board of Governors of the Federal Reserve System issued an order requiring corrective action and assessed a USD 100 million civil money penalty against the bank’s parent holding company, Discover Financial Services, and its subsidiary, DFS Services LLC.
Federal Deposit Insurance Corporation 2025-04-18
Federal Deposit Insurance Corporation orders Discover Bank to remediate card misclassification and pay USD 150 million penalty with at least USD 1.225 billion restitution
The FDIC issued enforcement orders against Discover Bank, requiring corrective action, a restitution plan of at least USD 1.225 billion, and a USD 150 million civil money penalty due to misclassifying consumer credit cards as commercial. This led to over USD 1 billion in excess interchange fees charged to merchants. Concurrently, the Federal Reserve Board imposed a USD 100 million penalty on Discover Financial Services and its subsidiary.