Discover fined for student loan practices

Discover Financial Services has been ordered to pay approximately $16 million in restitution and another $2.5 million in fines for illegal collection practices with respect to private student loans, according to the Consumer Financial Protection Bureau. Discover is mostly known for credit cards, but the company allegedly overcharged student loan borrowers, denied them tax benefits, called them early in the morning and late at night and engaged in other illegal acts. This will affect more than 100,000 borrowers in Minnesota and around the country.

Because private loan borrowers are offered fewer protections than than those who have loans that have been issued or insured by the federal government, the CFPB is cracking down on violations like this. Discover is accused of deceiving over 7,000 debtors about the monthly amount they owed over 30,000 times, according to the agency. Discover also misled over 156,000 borrowers about the amount of interest they owed. The company failed to provide with other basic information about the debt, such as the source of the debt and the borrower's right to dispute its validity.

Debt collectors are subject to a federal law that restricts the time of day in which they can attempt to call debtors. In Discover's case, more than 1,000 borrowers received calls before 7 a.m. and after 9 p.m., which is prohibited. The CFPB has stated that Discover knew about these calls for several months before taking any action.

A person who is experiencing creditor harassment may have a claim against the bill collector. Calls placed at unreasonable times or conducted in a threatening manner may be in violation of the Fair Debt Collection Practices Act. A person who has been the victim of this type of activity may want to discuss the matter with an attorney who has experience in this area.

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