Consumer complaint received 2019-03-12
Company: DISCOVER BANK
State: NM
Product: Debt collection
Sub-product: Credit card debt
Issue: Took or threatened to take negative or legal action
Sub-issue: Threatened or suggested your credit would be damaged

Complaint:
This is the letter I sent to Discover regarding The Credit Card Accountability Responsibility and Disclosure Act ( or Credit CARD Act ) was passed by the United States Congress in XXXX, expanding on the Truth in Lending Act, and took effect in XXXX. Its purpose was to curtail deceptive and abusive practices by credit card issuers. 

Discover Financial Services XXXX. Box XXXX XXXX XXXX XXXX, UT XXXX Dear Discover Financial Services regarding last 4 digits # XXXX, I have been in contact with our lawyer. And he advised me to send Discover a Demand Letter. My daughter has been notified in writing and verbally from Discover of legal action and of her credit being negatively impacted. 

My daughter, XXXX XXXX SS # XXXX Cell # XXXX has given you verbal permission for me to communicate with you. XXXX opened an account with you last XX/XX/XXXX when she was XXXX. She was given a link to apply for a credit card from a fellow XXXX friend who would credit {$50.00} for referring her and XXXX would be credited {$50.00}. My daughter filled out the online application including that she made {$4000.00} a year and had a savings of {$1000.00}. She was awarded a credit limit of {$1500.00}! 

She made purchases and made maybe a couple of payments. In XX/XX/XXXX she asked for a credit increase and was awarded another {$300.00} increase. She requested another credit limit increase in XXXX and was denied. 

As you are aware : In XXXX Congress passed the Credit Card Accountability Responsibility and Disclosure Act of XXXX ( Credit CARD Act ), which amended the Truth in Lending Act ( TILA ) and the Fair Credit Reporting Act ( FCRA ) to provide greater substantive protections, including special provisions for borrowers under age XXXX and college students. 

As it reads : ( A ) PROHIBITION ON ISSUANCE.No credit card may be issued to, or open end consumer credit plan established by or on behalf of, a consumer who has not attained the age of XXXX, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph ( B ). ( B ) APPLICATION REQUIREMENTS.An application to open a credit card account by a consumer who has not attained the age of XXXX as of the date of submission of the application shall require ( i ) the signature of a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of XXXX having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of XXXX ; or ( ii ) submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account. 

So, essentially Discover needed proof that my daughter had a source of income. She was not asked to submit any evidence on your online application. She did not give you a written application. With the {$50.00} - {$500.00} incentive, without a cosigner, without proof of income, you manipulated her into getting a credit card with a credit limit that was inappropriate. These are the reasons for the ACT in the first place and Discover went around that law. You also have student credit cards that would have been more appropriate for her. 
In the end, it created an unsuccessful experience with understanding credit, paying off debts, and building credit for my daughter. When someone borrows money and they are at 30 % of the poverty income, they can not pay it back. Its plain common sense regardless of any formula that you have. She had no means of paying off a credit card in the first place, nor does she have that now. She has been reported for late payments up until XX/XX/XXXX. Discover has removed late fees. I have brought her account up to date. 

Discover needs to understand and take partial ( 30 % ) responsibility for the fact that a XXXX-year-old with no source of income other than what we give her monthly to live as a student was irresponsibly awarded a credit card with not a {$250.00} or {$500.00} credit limit but, a {$1500.00} and then {$1800.00} credit limit! You did that without any proof of income, which is required by law. 

Please remove 30 % ( {$540.00} ) from her principle. I will pay the rest in one lump sum when that has been confirmed and a written form of communication stating that her credit report reads that the account is up to date and that the previous late payments were reported in error by Discover. Do not allow the report to read that Discover came to a settlement agreement with her. 

As a mother, I want to say Shame on you Discover for taking advantage of a young consumer. And, shame on me for not teaching my daughter to be wary of credit card companies that take advantage of her. As a company, please refrain from any marketing credit cards to young adults without the income to repay their obligations. If this would have been done with common sense, she could have responsibly used a low credit limit credit card to make it easier to manage her monthly cash flow and track her expenses. 

If you can not grant this demand, please get me in contact with someone above your decision-making authorization ability. 


Thank you for your time and thoughtful consideration, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX, NM XXXX XXXX

Company response to consumer: Closed with explanation