Consumer complaint received 2022-10-06 00:00:00
Product: Payday loan, title loan, or personal loan — Personal line of credit
Issue: Getting a line of credit — 
Company: DISCOVER BANK
State: NV

Complaint narrative:
I applied for a Discover personal loan on or around XX/XX/2022, after repeatedly receiving communications from Discover encouraging me to do so. Based on my XXXX XXXX, income and other factors, I was offered a $ XXXX loan after submitting an online application. Considering a relatively high interest rate offered, I realized that I do not need the full amount, and called Discover to adjust it down to $ XXXX. Shortly after, I received a message stating that there are some outstanding steps to complete in the online application before the loan is finalized. 

After logging in to the online application as prompted, I saw 2 outstanding steps : 1 ) Income verification, stating that I should call the XXXX number to do that ; 2 ) Submitting 3 most recent statements from my most used checking account. Accordingly, I submitted the statements and called Discover for income verification. I was told that Discover does not need anything else from me, and that they are just reviewing my statements ( even though the online application suggested otherwise ). I called a couple of days later, and received the same response. A couple of days later, I received a message from Discover declining the loan, with the reason stated as insufficient ability to repay. Subsequently, I called Discover on XXXX to explain that it was simply impossible to use the provided statements for gauging my ability to repay because it is impossible to get a complete picture of my income from them. The representative was unhelpful, and although she agreed that the income verification process was deeply flawed, she stated that there is no review option available. Further, she cryptically stated that there were a couple more things, implying that the stated reason in the declination message was not reflective of the actual reasons, which presents a major regulatory concern, as the regulations do not allow incomplete or misleading stated reasons for declining credit. 

Substantively, it appears that Discover deviated from their own process of evaluating loan applications ( as outlined in the online application ), skipping income verification as a separate step and relying on the checking statements instead. This is a deeply flawed approach for a multitude of reasons : 1 ) It implies that the payroll is deposited to a single checking account, which is not the case ; 2 ) It does not accurately capture income that is deposited less frequently than quarterly ( e.g. : Annual bonuses ) ; 3 ) It does not capture investment income ( unless the proceeds are transferred from the brokerage to the checking account ) ; 4 ) It implicitly treats contributions to 401K, FSA and other accounts contributed to by payroll deductions as expenses when in fact they are income that has zero visibility in checking statements ; 5 ) It fails to account for any employer contributions to such accounts ; 6 ) It fails to account for any changes of income that are certain in the future ( e.g. : Additional bonuses announced by the company, announced pay raises, etc ).

Discovers failure to recognize these factors and at a very least, request my comments, led to an incorrect assessment of my income, resulting in a baseless decision to decline my loan application. Discovers refusal to review their decision in light of numerous deficiencies outlined above ( as well as claiming some other hidden reasons for that ) is appalling and raises a spectrum of compliance concerns.

Company response to consumer: Closed with explanation