The New York Times reported yesterday that Minnesota Attorney General Lori Swanson filed a lawsuit against Discover Financial Services, claiming that it duped customers into buying optional fee-based products such as credit monitoring and payment protection plans. The lawsuit alleges that the company made "aggressive, misleading and deceptive" telemarketing calls to customers, and in some cases used tactics to disguise the fact that a sale was taking place.
The complaint alleges that some consumers were told the call was a courtesy call and not a sales call, while some were charged for enrollment in the products even though they didn't agree to purchase anything. In other cases, "the company tricks people into unknowingly signing up for these products, usually by inducing consumers to say 'OK' or 'yes' to a benign statement without understanding they are signing up and then treating that response as authorization to bill their credit cards," the Attorney General's office said in an online statement.
The lawsuit contends that in some cases the caller read a disclosure to consumers that masked or didn't mention pricing information, by using tactics such as leaving out keywords, altering the wording or speed-reading the text "all to make it incomprehensible to the consumer."
In a statement, Discover officials have said that it is not in their interest "to sell a product that doesn't enhance our relationship with our card members."
A case of consumer beware
Because an existing credit card issuer already has your credit card number, the company can start billing you once verbal consent is obtained -- and keep charging you for the product or service every month. If you don't review your monthly statements, you won't necessarily catch the monthly fee.
I don't personally have a Discover Card, but I have received calls similar to the ones described in the complaint. Recently I received two telemarketing calls from one of my credit card issuers about opting into a fee-based credit monitoring service. During the phone call, the representative offered to mail me a free copy of my credit report and credit score if I provide my consent. The catch, as I quickly realized, is that I had just 30 days to review the materials and cancel. He didn't mention the ongoing cost if I failed to cancel. Or maybe he did -- I couldn't quite catch the price as he verbally sprinted through the fine print.
If you receive a phone call from your issuer about an optional product or an offer to receive free credit materials in the mail, be very careful. Agree to the offer and you may wind up with a recurring fee on your statement. Unless you truly want the product, make sure to decline the offer when prompted to provide your consent and check your monthly statements to ensure you weren't billed. If you were, dispute the fee immediately.
Have you received a telemarketing call for a fee-based credit product?
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