SAN FRANCISCO (CN) – Discover Financial Services charged hundreds of dollars in hidden fees to its credit cardholders after enrolling them in a payment protection plan without their consent, a class action claims in Federal Court. The class claims Discover did this after a deceptive ad campaign that claimed its plan “provides both debt suspension and debt cancellation benefits for a certain fee.”
The touted benefits included a hold on monthly payments or even cancellation of credit card balances during hardships such as disability or sudden illness, the eight named plaintiffs say in their complaint.
The class members claim they were under the impression that the fee was offered at 89 cents for every $100 of their Discover Card balance each month. They claim that authorized Discover to send them more information about it, it enrolled them in the program without their knowledge.
They say Discover also charged them higher fees than it advertised. The plaintiffs say they believed, from Discover’s representations, that the 89-cent charge kicked in at each $100 increment, but that Discover actually charged a percentage of the total monthly balance, including on increments of less than $100.
Plaintiff Michele Kraynak says she was charged over $5,000 in hidden fees under the plan, in which she had been unwittingly enrolled since 2003.
Other members say they were charged from $200 to $1,600 in hidden fees.
The class demands punitive damages for false advertising, violation of the Truth-in-Lending Act and state consumer protection laws. They are represented by Michael Flannery with Carey, Davis and Lowe of St. Louis.