NEW YORK–Discover Financial Services, which is facing a government probe over its marketing of credit card insurance-like products, believes its relatively new practices will appease regulators, a top executive said here Feb. 16 at a Keefe, Bruyette & Woods conference on cards, payments and financial technology.
"We believe practices we've been operating under at least for the last six months are the direction regulators will want to go" in, said Roger Hochschild, Discover chief operating officer.
He did not elaborate on those practices. Discover disclosed last month that it was facing a joint enforcement action by the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp., over its marketing of lucrative but controversial credit card payment protection plans (see story).
The credit card company posted $241 million in revenue on the products in the fiscal year ended Nov. 30.
Discover had alluded to changes to its practices in earlier regulatory filings.
“Before the FDIC's and the CFPB's review began, Discover Bank made changes to both its fee-based products and program, and Discover Bank believes its current business practices substantially address the regulators' concerns,” the company said in its latest 10-K report filed Jan. 26.
Hochschild told the audience he could not estimate the financial impact of the government probe.
But he confirmed that the government is so far only scrutinizing how Discover markets the protection products–not how much it ultimately charges customers for them.
Asked during the presentation if it was accurate that the consumer bureau only has "a problem with the marketing, ... not with the fee structure of the products," Hochschild simply responded, "Yes."
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