What is the Discover Card, and who controls it?
The Discover Card is one of the world’s most recognizable credit card brands, and is the fourth-largest brand in the U.S., with close to 44 million cardholders. It is a massive, global financial tool and was created during what many consider to be the heyday of consumer credit cards. Established in 1985 by Sears, it hit the market with plentiful incentives, including a much higher credit limit, no annual fee and, eventually, cash back bonuses. These incentives were enormously successful to the brand and disruptive to the credit industry at large, forcing other credit card companies to provide like incentives. That is, perhaps, just one reason among many why credit card lines exploded in popularity in the 80s.
Sears, though, has crumbled in recent years, so it had to let go of the property. The Discover Card was first part of a merger with Morgan Stanley, which acquired the card brand. After a decade of managing and servicing the brand, it was spun off into its own company, Discover Financial. The Discover Card is just one component of the Discover Financial parent company, and when cardholders are sued for debt on their card, it is done with Discover Financial’s backing.
Discover Financial is a young company, so it hasn’t had as much time to create scandals for itself, but it does have one already. In 2015, the Consumer Financial Protection Bureau, or CFPB, fined Discover Bank (another subsidiary under the Discover Financial umbrella) $2.5 million and forced the company to refund $16 million more for several reasons, most of them pertaining to student loan debt. They include overstating the minimum payment due on loan accounts, refusing to provide information needed for income tax benefits, and illegal debt collection methods. Discover Bank was found to have called people late at night and early in the morning in an attempt to collect debt.
Because Discover Card has shown that it won’t always engage in good faith with its customers, it is essential that cardholders be ready to fight back if they are the subject of a lawsuit.
What should I do if I’m being sued by Discover Card?
Major financial institutions like Discover Financial are diligent with their recordkeeping, ensuring they have the information they need should litigation become an option. As such, it’s difficult for cardholders to defend themselves if they really do owe the debt.
However, it is still wise for cardholders to demand verification of the debt if they are sued or if collection efforts have been stepped up. It is very common for cardholders to be informed of debt that they had no idea existed, usually accrued through the aggressive use of fees and penalties. It’s also common for cardholders to be charged with debt that they never picked up in the first place. Mistakes do happen, but if a cardholder pays close attention, they will spot any inaccuracies.
Discover Financial has a few options when they decide an account is no longer worth trying to collect on. This decision is typically made after six months of no payment. At this point, Discover Financial can either send the account to a debt collection firm they are affiliated with, find an attorney near the defendant and file a lawsuit through them, or sell the debt to a debt buyer. How the suit proceeds will depend on where the debt ends up.
- If Discover Financial or one of its collectors sues – If Discover Financial or an affiliated debt collector sues the cardholder, it will do so using an attorney located close to where the cardholder lives. Therefore, a clear sign that a suit is forthcoming is when the cardholder receives collection letters from an attorney in their area.When the official notification of the lawsuit comes in, it will be in the form of a complaint and summons. It is critical not to panic at this point, nor should you ignore the summons. This is what debt collectors want, as all Discover Financial or a collector has to do is show up, and they win a default judgment. With this judgment, the collector can do serious damage to the cardholder’s credit and exercise aggressive means of collection, including confiscating business assets.
So, it’s important to answer the complaint and respond to the summons. A debt defense attorney can assist with both.
If the debt is accurately represented by Discover Financial or the collector, settlement negotiations may be inevitable. However, merely pushing back against a lawsuit can be enough to gain an advantage. Debt collectors don’t like getting tangled up in lawsuits, as it demands resources to do so. Sometimes, the cardholder wins their own default victory when the collector decides that its time is better spent elsewhere.
The critical point is this, then: Always fight the lawsuit.
- If Discover Financial sells the debt to a debt buyer – Debt buyers, also termed scavengers, purchase massive amounts of high risk debt, looking to recoup on a small portion of that debt. As such, debt buyers are often reckless in how they buy accounts, their recordkeeping fastidiousness and their approach to litigation. It’s extremely common for debt buyers to buy accounts, sue the cardholders associated with them and not have the information they need to prove their authority to sue. Debt buyers don’t care if a handful of their cases go belly up, because they have quantity on their side.That is an advantage for a stubborn defendant. Demanding comprehensive information from the debt buyer and remaining in the fight often removes the debt buyer’s will to fight. And a debt defense attorney knows exactly how to execute this tactic to its fullest extent.
Debt collection lawsuits can overwhelm people, especially if they appear out of the blue. But with a debt defense attorney on hand, a measured response to the lawsuit is always possible.