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Discover Bank Busted for $1.225 Billion Credit Card Scam, Delaware 2025
Washington – In a stunning revelation, the Federal Deposit Insurance Corporation (FDIC) announced the issuance of three orders against Discover Bank, Greenwood, Delaware, for a massive credit card scam that has left merchants reeling with losses of over $1 billion.
The FDIC determined that for approximately 17 years, the Bank misclassified millions of consumer credit cards as commercial, resulting in higher interchange fees for transactions processed on the Discover network. This brazen move led to merchants being overcharged over $1 billion in interchange fees when accepting payments with the misclassified credit cards.
The FDIC issued an Amended and Restated Consent Order requiring corrective action, an Order for Restitution requiring a restitution plan to distribute at least $1.225 billion to adversely affected merchants, merchant acquirers, and other intermediaries, and an Order to Pay assessing a $150 million civil money penalty.
In a concurrent action, the Board of Governors of the Federal Reserve System issued an order requiring corrective action and assessing a civil money penalty of $100 million against the Bank’s parent holding company, Discover Financial Services, Riverwoods, Illinois, and its subsidiary, DFS Services LLC.
The FDIC’s orders are a stern warning to banks and financial institutions that engage in such egregious behavior. The agency’s actions will undoubtedly send shockwaves throughout the financial industry, leaving many to wonder how such a massive scam went undetected for so long.
LaJuan Williams-Young, an FDIC spokesperson, had no comment on the matter.
The FDIC’s orders against Discover Bank are a powerful reminder that the agency will not hesitate to take action when banks engage in such egregious behavior.
Key Facts
- Agency: FDIC
- Category: Fraud & Financial Crimes
- Source: Official Source â†â€â€ÂÂÂ
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