Discover hit with $1.2 billion restitution order over interchange fees

In imposing the penalty, the watchdog says 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.

As a result, merchants were overcharged over $1 billion in interchange fees when accepting payments with the misclassified credit cards.

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 and its subsidiary, DFS Services LLC.