Discover Cardholders May See $8.7M Class Action Settlement

A U.S. District Court in California has preliminarily approved an $8.7 million class action settlement stemming from a lawsuit against Discover Financial Services for alleged robocalling practices.

Consumers who may be entitled to a payment have been receiving notice of the settlement and must file a claim or opt out by early next year. The claims administrator has been sending customers postcards and emails with instructions for participating (or not) in the settlement, in addition to publishing notices of the settlement through various media outlets.

The initial complaint alleges each member of the class — described as Discover account holders who did not consent to but received automated phone calls between Nov. 30, 2007 and Sept. 10, 2013 — would be entitled to $1,500 in damages if the plaintiffs win the case. Under the terms of the settlement, however, class members would be eligible for between $20 and $40, attorneys have estimated.

In the case, Andrew Steinfeld v. Discover Financial Services, et al., the claimant alleges Discover violated an aspect of the Telephone Consumer Protection Act by using an automated telephone-dialing system or making prerecorded phone calls to people who had not opted into receiving the calls.

“Congress considered automated calls without prior express consent an invasion of privacy and a nuisance,” said Daniel Hutchinson, a partner at Lieff Cabraser Heimann & Bernstein and an attorney on the case. “The penalty is designed to recognize that this is a violation of your rights.”

According to court papers, the lawsuit came about after Steinfeld, a California resident, opened a Discover credit card in January 2011. “Beginning in or around December 2011, Discover repeatedly contacted Plaintiff Steinfeld on his cellular telephone. Plaintiff received repeated, harassing calls at all hours of the day. Because these calls were prerecorded, Plaintiff had no ability to request that the calls end or to voice his complaints to a real person,” the lawsuit filing says.

Walter Bradley, another plaintiff and California resident, reported at least 25 calls made by an automated dialing system.

“Discover does not comment on pending litigation,” a Discover spokesman said via email. “That case has received only preliminary approval from the court.”

Initially, the plaintiffs filed the complaint in federal court, and Discover responded with a motion to compel arbitration — with those briefs pending, the parties decided to put the trial on hold and enter mediation with a federal judge. That’s when they arrived at the proposed settlement, which a judge has yet to give final approval.

The settlement find will provide for $2.175 million in attorneys’ fees and costs, and $2,000 in service awards to the two representative plaintiffs.

Potentially affected consumers — several million of them, though the exact number isn’t known — have until Feb. 25, 2014, to file a claim. Those who want to opt out of the settlement must send a request for exclusion to the claims administrator by Jan. 13, 2014, according to a notice received by a Discover customer. The toll-free contact number for the administrator is 1-800-248-1796.

The administrator will work with those who decided to participate to distribute the settlement, if it gets final court approval.

Image: Karen Roach