Consumer complaint received 2016-06-15
Product: Consumer Loan — Installment loan
Issue: Taking out the loan or lease — 
Company: DISCOVER BANK (CA)

I 'm filing a complaint against Discover Personal Loans for possibly predatory, deceptive and/or fraudulent lending practices. 

On XXXX XXXX, 2016, I applied for a personal ( debt consolidation ) loan through their website. After I had shopped around a few other online lenders, I found that Discover was the only one that offered the amount and terms I was looking for. 

I used the loan calculator on their website to get a rough idea of what my interest rate and monthly payments might be, based on my credit score. Though the calculator includes disclaimer language that it is for " educational purposes '' only, the inclusion of the prospective applicant 's credit score gives it the appearance of relative accuracy. A prospective applicant may reasonably assume that her final interest rate may vary by only 1 or 2 percentage points. Given my credit score of over XXXX, the calculator determined a 12.99 percent interest rate and a $ XXXX monthly payment. 

I applied and received a confirmation that my application had been received and approved. The confirmation email did not include any loan details. This was the only online/written communication I would receive until after the loan had been disbursed. 

The email instructed me to call their service center to complete a short phone interview. I did. A representative confirmed the basic information in my application and then offered me the loan amount and terms I had applied for, but at a much higher interest rate than I had expected : 18.99 percent. When I balked, she transferred me to a supervisor by the name of XXXX, who offered me a two-point reduction - 16.99 percent -- if I agreed to ACH payments. It was still more than I had hoped for but I agreed. I was borrowing {$30000.00}. My interest rate would be 16.99 percent, resulting in a monthly payment of {$610.00}. I verified this calculation with a separate loan calculator at XXXX. 

At no time during this process was I asked to provide documentation to verify my income or expenses. This struck me as odd. 

After the loan had been funded and I was able to log in to my account online, I noticed my monthly payment had jumped to XXXX, with no explanation. The TILA disclosure I received a few days later states that ALL figures - interest rate, terms, payment amount - are " estimates '' based on the first payment date of the loan. This makes no sense to me. I was under the impression this was a fixed-rate, not variable rate, loan. And never have I seen personal loan figures based on the first payment date. I work with accountants and financial aid professionals ; as far as I know, loan figures are always based on the date of disbursement. As the TILA is written now, it would seem that Discover has carte blanche to increase the interest rate and monthly payment amount at their sole discretion. 

All this taken together - not verifying the borrower 's income and expenses, the lack of written communications prior to asking for the borrower 's consent to the terms, and the inexplicable increase in payment amount - would seem to suggest lending practices that are, at best, just this side of legal, and predatory and deceptive at worst.