In July, the company reported that it had received a proposed consent order from the Federal Deposit Insurance Corporation (FDIC) “in connection with consumer compliance.” But the company provided few details. In a recent regulatory filing, the credit card company said it had come to an agreement with the FDIC on the details of the consent order.
Discover stated that as part of the consent order, it will “improve its consumer compliance management system and enhance related corporate governance and enterprise risk management practices.” The company added that it will increase board oversight of its compliance systems. Discover claimed that it has been taking “significant steps” to strengthen its compliance management system and address other issues in the consent order. It also indicated that no monetary penalties were levied as part of the settlement.
The company also noted that the agreement is not related to a separate FDIC complaint that starting in 2007, Discover misclassified credit cards into its highest merchant and merchant acquirers pricing tier. Discover said that the investigation into that matter is ongoing and could result in “additional enforcement actions or other supervisory activity from the FDIC and other regulatory agencies.”
Details of Discover Bank’s Statement
Discover said in a regulatory filing that, “On September 25, 2023, following the consent of the Board of Directors of Discover Bank, the Federal Deposit Insurance Corporation issued the previously disclosed consent order to Discover Bank, a subsidiary of the Registrant. The consent order addresses shortcomings in Discover Bank’s compliance management system for consumer protection laws and related matters.”
“As part of the consent order, Discover Bank has agreed to improve its consumer compliance management system and enhance related corporate governance and enterprise risk management practices, and increase the level of Board oversight over such matters. Discover Bank has been taking significant steps to strengthen the organization’s compliance management system and address the other issues identified in the consent order.”
“Management and the Board are committed to ensuring that all of the requirements of the consent order are met. The consent order does not contain any monetary penalties or fines. As previously noted, the consent order does not address the card product misclassification matter disclosed by the Registrant earlier this year. As regulatory review of the card product misclassification matter is ongoing, additional enforcement actions or other supervisory activity from the FDIC and other regulatory agencies remain possible.” 