Discover Financial Services, Inc. Investigation
The law firm of Kirby McInerney LLP is investigating potential claims against Discover Financial Services, Inc. (“Discover” or the “Company”) (NYSE: DFS). The investigation concerns whether Discover has violated the federal securities laws and/or engaged in other unlawful business practices.
Discover operates as a credit card issuer and electronic payment services company. The Company issues credit cards and offers student and personal loans, as well as savings products such as certificates of deposit and money market accounts.
On July 20, 2022, after the market closed, Discover announced Q2 2022 financial results. Discover announced, “the company is suspending until further notice its existing share repurchase program because of an internal investigation relating to its student loan servicing practices and related compliance matters. The investigation is ongoing and is being conducted by a board-appointed independent special committee.” On this news, the price of Discover shares declined by $9.80 per share, or approximately 8.93%, from $109.80 per share to close at $100.00 on July 21, 2022.
Discover previously faced regulatory scrutiny related to its student-loan business in 2015 when the company agreed to a consent order with the Consumer Financial Protection Bureau regarding private student-loan servicing practices. The Bureau’s 2015 Order required Discover to refund $16 million to consumers, pay a penalty, and fix its unlawful servicing and collection practices. In December 2020, the Consumer Financial Protection Bureau (“Bureau”) issued a consent order against Discover Bank, The Student Loan Corporation, and Discover Products, Inc. (collectively, “Discover”) based on the Bureau’s findings that Discover violated the prior order, the Electronic Fund Transfer Act (“EFTA”), and the Consumer Financial Protection Act of 2010 (“CFPA”).