Consumer complaint received 2021-04-06
Company: DISCOVER BANK
State: IL
Product: Credit card or prepaid card
Sub-product: General-purpose credit card or charge card
Issue: Other features, terms, or problems
Sub-issue: Privacy issues

Complaint:
On XXXX, I was pre-approved for a credit card with Discover. 
After applying, they pulled my credit report ( from XXXX, perhaps others ) but I was not immediately approved. 
On XXXX, I was approved for a credit card with Discover after they finished verifying my identity by calling me ( credit limit : XXXX XXXX ). 
On XXXX I received an electronic IRS Form 4506-C requesting tax returns ( XXXX ) for XXXX and XXXX Note that the email i received for the XXXX stated that " Discover Financial Services requires your consent to receive tax information from the Internal Revenue Service ( IRS ) to verify information on your account. " -- this would be for verifying information they already have about me : name, SSN, address, phone, income. 
Since identity was already verified in order to open the account ( name, SSN, address, phone ) via my credit report and calling me, this only leaves income. 
The email noted that " a temporary hold has been placed on [ my ] Discover card account '' and instructed for me to provide my electronic consent " within 5 days '' or my account would be closed. ( which would negatively impact my credit report ) On XXXX after receiving the form I called the provided number ( XXXX ) for Discover Customer Protection Services Since my identity had already been verified when I was approved for the card ( called me on the provided phone number, pulled credit report and matched addresses / phone numbers etc ) this form must have been to verify my stated income. On the application, I stated my current annual income, which has drastically changed since XXXX. 
Therefore, the XXXX tax returns would not provide any useful information ; on the contrary, they would likely bring up a discrepancy between stated income on the application vs the returns. 
On XXXX during the call I informed the representative of this ; they responded repeatedly that it would not be an issue. I asked for an email confirming that it would not be an issue, but they were unable/unwilling to do so. At this point I asked if the rep 's supervisor might be able to, upon which I was transferred to their supervisor. 

I repeated my concerns to the supervisor ; she was unwilling to answer whether or not this would be an issue. According to her, in the past, there have been cases where customers consented to disclosing tax returns and then had their accounts closed without an opportunity to provide alternate documentation. I expressed that I wanted to avoid this ( as it would unfairly reflect negatively on my credit report as account closed by guarantor ). 
I asked for alternative methods of verifying income. ( XXXX XXXX, XXXX tax returns, paystubs, banks statements, signed form, etc ) including a XXXX tax return via the same Form XXXX on paper, consenting to disclosing XXXX tax returns. 
IRS Form XXXX says that it " must be received by IRS within 120 days of the signature date '' which leaves plenty of time for me to file my XXXX returns ( due XXXX ) and for XXXX to request it from the IRS. I offered to have them leave the hold on my account until they were able to complete verification. However, the supervisor informed me that they " must '' complete the process withing 42 days of starting the verification process -- ( XXXX -> XXXX ) which conveniently brings them to 1 day after the deadline for filing XXXX tax returns. I brought up that exactly 42 days seemed like an odd time-frame. 
The supervisor informed me that I would have go " find out '' if Discover would offer me alternative methods of proving my income after consenting to release my XXXX tax returns ( which would not help verify anything ). 

She advised that I close the account and reapply towards the end of XXXX, when they would probably be accepting XXXX tax returns to verify income via XXXX. 
I closed my account on the call. 
No other creditor has asked requested my tax returns, and I have other cards with significantly higher credit limits than XXXX USD. Discover also failed to provide a privacy policy of any sort stating that my tax returns would only be used for verification of the information they had on file as of XXXX and for no other purpose. 

In summary, due to a combination of ( 1 ) Discover 's negligence to verify income before approving me and ( 2 ) their disregard for privacy in requiring disclosure of tax returns irrelevant to verifying income ( or anything else ) while refusing alternative verification methods, I have been forced to close my newly opened account, which still unfairly negatively reflects on my credit report ( conventional scoring models such as FICO 8 use average age of accounts, # of new accounts, etc as significant factors ).

Company response to consumer: Closed with explanation