Consumer complaint received 2025-01-11 00:00:00
Product: Debt collection — Credit card debt
Issue: Took or threatened to take negative or legal action — Sued you without properly notifying you of lawsuit
Company: DISCOVER BANK
State: TX

Complaint narrative:
Re : Discover Bank Documentation and Securities Verification Issues Related Legal Action : XXXX XXXX XXXX, XXXX  This complaint addresses serious concerns regarding Discover Bank 's inability to provide proper documentation of debt ownership while continuing collection efforts. The issues stem from Discover 's own publicly filed documents with the Securities and Exchange Commission ( SEC ) which reveal a complex securitization structure that raises fundamental questions about their right to collect on this account. 

According to Discover 's SEC filings and trust agreements, particularly their Pooling and Servicing Agreement, when a customer establishes a credit card account, this creates a debt instrument that constitutes a security under federal law ( 15 U.S.C. 77b ) as evidence of indebtedness. Discover 's documentation reveals a specific transfer structure where these instruments are transferred " without recourse, all right, title and interest '' from Discover Bank to Discover XXXX, XXXX. Through the Pooling and Servicing Agreement, these receivables are then transferred to Discover Card XXXX XXXX XXXX XXXX XXXX XXXX. Subsequently, through the XXXX XXXXXXXX Collateral Certificate, interests are moved to Discover Card XXXX XXXX XXXX XXXX XXXX XXXX, which issues different classes of notes backed by these receivables. 

This transfer structure is significant because under the Uniform Commercial Code ( UCC 3-301 ) and Texas Business & Commerce Code 3.301 , only the person entitled to enforce an instrument may demand payment or pursue collection. Furthermore, UCC 3-203 requires proper delivery and documentation of all transfers to convey enforcement rights. Discover 's own filings show they have transferred away their rights through this securitization process, yet they continue collection efforts without providing documentation of proper transfers or current ownership. 

The complexity of Discover 's securitization process is detailed in their SEC filings, specifically their Form 424B5 Prospectus. After the initial transfer to Discover XXXX XXXX, the pooled receivables in XXXX are used to support the issuance of the Series XXXX Collateral Certificate. This certificate represents an undivided interest in XXXX, which is then transferred to XXXX. Through this structure, XXXX issues various series, classes, and tranches of notes to investors, all backed by the original debt instruments. 

According to Discover 's own Pooling and Servicing Agreement, these transfers are tracked through specific designations, with accounts identified in their computer files with codes " XXXX '', " XXXX '', " XXXX '' or " XXXX '' in a field captioned " XXXX ''. This coding system demonstrates their internal tracking of which accounts have been transferred into their securitization structure, yet when asked for documentation of proper ownership and transfer rights, they can not produce these basic records. 

Under CFPB Regulation V and the Fair Debt Collection Practices Act ( 15 U.S.C. 1692 ), any entity attempting to collect a debt must be able to verify both their ownership of the debt and their right to collect. Discover 's public filings create serious doubts about both. Through their documented transfer structure, the original debt instruments move through multiple entities, with each transfer diminishing Discover Bank 's connection to the original obligation. Their own documentation shows these receivables are " sold and assigned '' through their corporate structure, raising fundamental questions about which entity actually holds the right to enforce the obligations. 

The documentation gaps are particularly concerning given Discover 's detailed transfer structure. When requesting basic proof of ownership and chain of custody, Discover has failed to provide : - The original debt instrument and account documentation - Evidence of proper transfers through their corporate structure - Documentation showing proper XXXX registration - Series XXXX Collateral Certificate records- Proof of their current right to enforce the obligation Most significantly, Discover 's inability to produce proper documentation violates fundamental principles of both consumer protection and securities law. Their own transfer structure, as documented in their SEC filings, demonstrates how far removed Discover Bank becomes from the original debt instruments through their securitization process. The Series XXXX Collateral Certificate, representing undivided interests in the XXXX, and subsequent note issuances by XXXX create multiple layers between the original creditor and the current holders of interests in these obligations.

Company response to consumer: Closed with explanation