Discover Bank has been hit with a massive $1.2 billion restitution order by the Federal Deposit Insurance Corporation (FDIC) after the regulator found the bank had overcharged merchants on interchange fees for nearly two decades. The FDIC’s investigation revealed that, for approximately 17 years, Discover misclassified millions of consumer credit cards as commercial cards—leading to inflated swipe fees on transactions processed through the Discover network.
This misclassification resulted in merchants paying more than $1 billion in excessive fees. In addition to the restitution, the FDIC imposed a $150 million civil money penalty on Discover Bank for its conduct.
The fallout doesn’t stop there. In a parallel enforcement action, the Federal Reserve Board has also stepped in, mandating corrective action and slapping Discover Financial Services—along with its subsidiary DFS Services LLC—with an additional $100 million civil penalty.
The orders represent one of the largest restitution directives in recent regulatory history tied to interchange fees, underscoring heightened scrutiny over card classification and network fee practices.