Earlier this year, Capital One received an order from the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation (FDIC) to give refunds to customers under an order that it had engaged in deceptive telemarketing practices. Now Discover has received a similar order and fine with regards to its credit card add-on products.

Under the FDIC and CFPB's order, Discover will be refunding $200 million to approximately 3.5 million customers. Additionally, it will pay a $14 million civil money penalty.

The two agencies worked together and determined that Discover was using deceptive practices when it came to selling add-on products to the card like Payment Protection, Credit Score Tracker, Identity Theft Protection and Wallet Protection. Payment Protection was sold as a way for cardholders to freeze their payments for up to two years in the event of an emergency, such as unemployment, hospitalization or other types of life events. Credit Score Tracker gave people unlimited access to their credit reports and credit scores. Identity Theft Protection was to have provided daily credit monitoring. Wallet Protection would help people cancel their credit cards if their wallet was stolen.

After investigating Discover's telemarketing practices, the FDIC and CFPB found that Discover's telemarketers used scripts that had misleading language that could easily deceive consumers into not knowing whether or not they were actually buying a product. The telemarketers also downplayed key terms of the products and spoke quickly when it came time to discuss how much it would cost customers to add these products onto their account and the terms of the deal.

The agencies came to the conclusion that Discover's telemarketers misled consumers about these items costing money, instead usinglanguage that implied the products were extra free "benefits." The telemarketers also misled consumers about when they'd be charged for the product, claiming the consumer would be able to have time to review the product before purchasing it. However, Discover wouldn't provide the information until after they signed up the cardholder for the product. Some consumers were enrolled in these programs without consenting to, and Discover also withheld information about what it considered "eligible" in terms of providing program benefits, and consumers only found out they'd been excluded for things like pre-existing conditions or employment after it was too late.

As a result of the FDIC-CFPB order, Discover will change its practices to eliminate deceptive marketing so that these actions don't happen again. It will also pay restitution to consumers who have purchased the products, and those customers don't have to take any action in order to receive this refund. Discover must also submit to an independent audit and pay a $14 million penalty, $7 of which will go to the U.S. Treasury, and the other $7 million will go to the CFPB's Civil Penalty Fund.

The 3.5 million customers who will share the $200 million in restitution fees qualify for a refund if they were charged for one or more of the products between December 1, 2007 and August 31, 2011. The amount of the refund will vary depending on when the product was purchased and how long they had it on their account. Customers will also get at least 90 days' worth of fees paid, with any prior refunds being taken off that number. Approximately 2 million customers will get full repayment of all the fees they've paid. If the consumer is still a Discover customer, he will get a credit on his account. Otherwise, Discover will send a check.

"We have worked hard to earn the loyalty of our cardmembers, and we are committed to marketing our products responsibly," said David Nelms, chairman and chief executive officer of Discover.

The restitution payout will begin in approximately three months and should take about two months to complete.