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FDIC issues three orders against Discover Bank

Wednesday 23 April 2025 11:28 CET | News

The Federal Deposit Insurance Corporation (FDIC) has issued three orders against Discover Bank, Greenwood, Delaware. 

More precisely, the FDIC published an Amended and Restated Consent Order demanding corrective action, an Order for Restitution requiring a restitution strategy to provide a minimum of USD 1.2 billion to affected merchants, merchant acquirers, and other intermediaries, as well as an Order to Pay assessing a USD 150 million civil money penalty. Additionally, the agency concluded that for nearly 17 years, Discover Bank had wrongfully classified consumer credit cards as commercial, in turn leading to higher interchange fees for transactions processed on its network. This resulted in merchants being overcharged over USD 1 billion in interchange fees when accepting transactions with the misclassified credit cards.

FDIC issues three orders against Discover Bank

Moreover, in a parallel action, the Board of Governors of the Federal Reserve System issued an order demanding corrective action and assessing a civil money penalty of USD 100 million against Discover Bank’s parent company, namely Discover Financial Services, Riverwoods, Illinois, and its subsidiary, DFS Services LLC.

The decision comes just days after Capital One obtained the final regulatory approval for its proposed acquisition of Discover Financial Services, following authorisation from the Federal Reserve Board and the Office of the Comptroller of the Currency. The development assisted the merger process, which received approval from Delaware’s State Bank Commissioner in December 2024 and benefited from the support of over 99% of shareholders from both companies in a February 2025 vote.

Latest news from FDIC

Back at the beginning of February 2025, the FDIC released 175 documents, including its supervision of banks involved in or considering engagement with crypto-related activities. At that time, acting Chairman Travis Hill addressed the release, reacting to past criticism of the FDIC’s stance on crypto and blockchain. Previously, he mentioned that the agency’s approach created a perception that it was unwelcoming to institutions looking into blockchain or distributed ledger technology. After taking on this role, Hill began a comprehensive review of the agency’s supervisory communications with banks, exploring the provision of crypto-related products and services. 

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Keywords: regulation, interchange fee, Interchange Fee Regulation, banking, financial services
Categories: Fraud & Financial Crime
Companies: Discover, Federal Deposit Insurance Corporation
Countries: United States
This article is part of category

Fraud & Financial Crime

Discover

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Federal Deposit Insurance Corporation

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