Consumer complaint received 2017-11-06
Product: Credit card or prepaid card — General-purpose credit card or charge card
Issue: Fees or interest — Charged too much interest
Company: DISCOVER BANK (NH)

Executive Summary. This is a breach of contract complaint against Discover for refusing to honor their promise to this Complainant to substantially reduce the interest rate on their credit card - from 23 % to 12 % - on the Discover credit card ending in # XXXX a promise made by the Discover representative on the telephone - if this Complainant were to promptly send the monthly payment discussed in that call on XX/XX/XXXX via Priority mail instead of via 1st class mail an act which this Complainant did perform on a timely basis.
Total Claim Amount. Based on 12 % interest, this claim is for {$11000.00}, that is, for the sum of two items : ( a ) The full credit of the card balance aXX/XX/XXXXof {$6400.00}, plus ( b ) All the payments made of {$5100.00} ( as of XX/XX/XXXX ) - since the card balance was fully paid ( at 12 % interest ) by the monthly payment onXX/XX/XXXXper the XXXX spreadsheet of the Discover monthly credit card payments during the last 8 years - that was sent to Discover by the CFPB with the other documents filed with this complaint as discussed in more detail in sections 2 and 3 below.
Card Balance Amount History at Key Dates. The contract to reduce the interest was formed onXX/XX/XXXX. This complainant and Discover have been in disagreement on the balance owed ever since. During the 8-year interval to the present, minimum payments have been made every month, ranging in size from {$250.00} per month in the first year to an average of about {$140.00} per month during the last 6 months. ( As explained in section 3 below, an XX/XX/XXXXfile - tracking the balance owed and a breakdown of each monthly payment into interest and debt reduction portions - has been filed with the CFPB by this Complainant and a copy is being sent to Discover by the CFPB. ) This XXXX file has two sheets - the 1st is an actual history of the Discover statements typically showing a 23 % interest rate - and the 2nd is a Would Have Been history - if 12 % interest had been charged instead. The 2nd sheet in the XXXX file also tracks the claim this complainant has against Discover in terms of the excess interest payments made since the balance was fully paid ( as ofXX/XX/XXXX) on the card based on 12 % interest. The sections 2 and 3 below discuss the balances owed at both the 12 % and 23 % rates at the key dates of ( a ) XX/XX/XXXXwhen this Complainant sent a letter to Discover documenting this claim and as of ( b ) XX/XX/XXXXwhen the total amount owed was fully paid off based on the 12 % interest rate being charged the point after which all the payments made after XX/XX/XXXX are fully refundable to this complainant.
1. The Creation of the Contract. The promise was made by the Discover representative during a phone call to this Complainant onXX/XX/XXXX ( when the balance on this card was {$11000.00} ) and this Complainant has notified Discover of this breach with timely phone calls, beginning in XX/XX/XXXX, and in writing, most recently in a XX/XX/XXXXletter.
2. This is the last chance for Discover to honor the promise made on XX/XX/XXXX ( to lower the interest ). Had Discover agreed to honor the 12 % rate retroactively to XX/XX/XXXXat the time they received a letter from this Complainant on XX/XX/XXXXthen the balance would have been adjusted down at that time to {$3700.00} ( instead of keeping it at the {$8900.00} balance that it was then ) and by agreeing that going forward, only 12 % would continue to be charged by Discover, then the card would have been fully paid off about two years later, that is, by the XX/XX/XXXX monthly payment. Instead, there is a cash refund due of all the payments made by this Complainant sinceXX/XX/XXXXor {$5100.00} as of now ( i.e., onXX/XX/XXXX) that would not have been accumulated by Discover. This CFPB complaint is the last chance for Discover to avoid litigation of this claim.
3. The Monthly Statements XXXX  file 9-year Recap. The difference between the {$8900.00} and the {$3700.00} - or {$5200.00} as of XX/XX/XXXXis per the monthly XXXX schedule accounting document prepared by this Complainant and sent to Discover - via this CFPB included with a copy of a more detailed version of this complaint being filed with the CFPB which the CFPB is sending to Discover. The XXXX file Spreadsheet has the 1st of 2 sheets that ( a ) lists an 8-year breakdown ( to the present ) of the actual activity in every monthly Discover Card statement including the beginning and ending balances like the {$8900.00} still owed onXX/XX/XXXX and how much of each payment was interest or principal - or other activity, consisting of only two small debits - since XX/XX/XXXX. That XXXX file also has the 2nd of 2 sheets that ( b ) re-calculates the principal and interest amounts but at the lower amount of interest - at 12 % - and a commensurate increase in the principal portion of each monthly payment - that would have been additionally paid each month if, starting onXX/XX/XXXX, Discover had reduced the 23 % rate effective retroactively 4 years from XX/XX/XXXX, as well as the revised beginning and ending monthly balances like the {$3700.00} that would have been in the statement at XX/XX/XXXXbased on 12 % vs. the 23 % that actually was in the majority of the monthly statements sent from Discover up to the present.
4. Discover did not respond to those breach notifications either in writing - or with a phone call, that is, Discover never entered into any form of good faith negotiations with this Complainant to resolve their breach of the interest reduction telephonic agreement of 6/25/09, leaving this Complainant with no alternative but to file this CFPB complaint.
5. The balance on this Discover Card was always company debt it never was the personal debt of this Complainant. The specific details of the breach by Discover are ; ( a ) the 1st step was when a Discover representative called this Complainant inXX/XX/XXXXand made an interest rate reduction promise ( b ) during a collection call to this Complainants home ( regarding a monthly payment which had been inadvertently overlooked for about 21 days ), ( c ) in exchange for a promise by this Complainant to mail that payment via Priority Mail, ( d ) specifically offering to reduce the interest rate ( from 23 % to 12 % ) and, most importantly, on ( e ) a company credit card balance that is, for charges that were utterly and entirely owed by the company that was this Complainants employer - never a personal debt owed by this Complainant. This is a claim centered around a company debt that had steadily grown to the full availability on a revolving basis - for charges directly incurred by that employer of this Complainant during the 7 years of this Complainants active employment that firm ( i.e., that began in XX/XX/XXXX and ended inXX/XX/XXXX ).
6. This was a Wrongful Interest Increase by Discover ( and Six Very Large Banks ) on Credit Card Predatory Loans. Discover was one of seven very large banks that jointly made significant credit card loans over that seven-year period to this Complainants employer - all the time holding this Complainant personally joint and severally liable for the repayment of those credit card borrowings.
Discover ( and the other 6 banks ) did not perform the due diligence required of all banks, that is, Discover failed to access the public financial information ( published quarterly by the SEC ) concerning this Complainants employer the true debtor of those credit card loans. Those public reports provided dozens of pages each quarter describing the flow of assets into the company - a flow that was almost entirely provided by two persons. 7. Why This Complainant Agreed To Be the Only Executive Jointly Liable for the Companys Debt. This Complainant agreed to be jointly liable with the company that employed him as a condition of his employment agreement for a key executive position that was offered to him by those two persons - who effectively controlled all the income-producing assets of the company. 8. The Agreement to be Personally Liable for Company Debts Was Based on Trust. This Complainant made a judgment-based assessment that ( a ) those two persons could be trusted to honor their business agreements, i.e., that they were honorable persons - and that ( b ) they together could easily afford to personally pay the entire total availability on the credit cards offered for the companys exclusive use by those seven very large banks and continue to provide the company with the asset inflows needed to sustain fiscally successful operations and company technology development. 9. The Decision to Trust was a Mistake, but The Assessment of The Ability to Pay Was Correct. In retrospect, this Complainant was wrong about the honorable intentions of those two persons ( or the lack thereof ), but not about their ability ( and willingness ) to provide the sizeable flow of assets that needed to be provided to the company during the full seven years of this Complainants employment
there, as well as during all of the subsequent years ( after XX/XX/XXXX ) - and up to the present.
10. The Banks ( including Discover ) were driven by Greed, at the Expense of Judgment and Due Diligence. Discover and the other banks did not competently fulfill their due diligence responsibilities they did not properly evaluate the risk of gradually advancing over {$200000.00} in credit availability ( collectively over a 7-year period ending in XX/XX/XXXX ) to a company whose income-producing assets were effectively controlled by those two other persons, without requiring their personal guarantees, in addition to requiring this Complainants joint and severable liability for the credit availability in excess of {$200000.00}. Discovers share of that total was {$11000.00}.
11. Those two other persons were in control of this Complainant`s employer because they were providing all of the companys key marketable technology and most of its financial day-to-day operating resources that were required over the long haul, to fulfill the companys periodic business plans.
12. The Wrongful and Fatal Due Diligence Error by Discover. Since Discover ( and the other 6 banks ) negligently did not require those other two persons to guarantee the companys debts on any of the bank cards it therefore was wrongful for Discover to hold only this Complainant personally liable for this debt owed by his employer.
13. This was a Predatory Credit Card Loan. The Discover credit card debt that is the focus of this CFPB complaint ( that totaled a debt of {$11000.00} on 06/25/09 ) was
one of those predatory bank credit card loans to this Complainants employer. 14. Why it was a Wrongful Predatory Loan. This was a Predatory loan because Discover ( and six
other large banks ) provided credit card total availabilities jointly to this Complainant jointly with only the company that employed this Complainant - that greatly exceeded the ability of this Complainant to personally pay those debts, should the company suddenly cease operations the precise definition of a Predatory Loan.
15. This Complainant is also the Victim of a Fraudulent Transfer of the Income-Producing Assets of His Employers Assets to Another Company. In XX/XX/XXXX, the company employing this
Complainant suddenly ceased operations when the two persons who had controlled the income-producing assets of that company quickly moved those income-producing assets to another company ( a new company ) that they also controlled ( via a fraudulent asset transfer ). 16. In response, Discover ( and the other banks ) suddenly increased the interest rate on the bank card debt ( s ) to 23 % ( i.e., typically at least double what had been paid in previous years ). 17. Discover benefitted directly from the higher interest rates caused by the fraudulent transfer. This caused this Complainant
to solely and personally owe the 23 % interest on the Discover card balance - and personally to pay it but without employment income from the new company - that now had the income from the fraudulently transferred assets and the new company also enjoyed all the following additional investments from the two persons in control of those assets - which this Complainants former employer had enjoyed previous to the fraudulent transfer. As a result, Discover wrongfully benefitted directly from the higher interest rates caused by the fraudulent transfer that victimized ( i.e., which was at the expense of ) this Complainant personally.
18. That is when the terms of the telephonic - collection call - agreement were negotiated, where Discover verbally offered to reduce the interest rate by nearly 48 % from that date on - if the current monthly payment were to be timely mailed by this Complainant via Priority ( at {$4.00} ), instead of by 1st Class ( at XXXX cents ) - an agreement that this Complainant honored in every way, but where it was a contract that Discover has totally failed to honor from that day up to the present.
19. An image of this Complainants XX/XX/XXXX XXXX XXXX check # XXXX to the U. S. Post Office for {$4.00} marked For Discover Payment is also being sent to Discover by the CFPB - with the other documents filed with this complaint. This document is written proof that this Complainant fulfilled his performance obligations under the terms of this agreement. ( The Priority envelope contained the XXXX XXXX check # XXXX for {$580.00} payable to Discover that was due no later than XX/XX/XXXX. )