FDIC issues three orders against Discover Bank

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.

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.

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