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Merchants caught up in three pricing class-action lawsuits involving Discover Financial Inc. have a proposed settlement to evaluate, according to a notice from the U.S. District Court for the Northern District of Illinois.
Announced Thursday, the settlement could see eligible merchants receive payments for Discover-issued consumer credit cards that were misclassified as commercial credit cards, which typically carry a higher interchange rate than consumer cards. Discover denies the claim, and the court has not determined who is right and wrong, the notice says.
Discover has agreed to pay between $540 million and $1.225 billion plus interest in the proposed settlement. Individual payment amounts will vary, the court says. The suits allege transactions were misclassified from Jan. 1, 2007 to Dec. 21, 2023. Notices of the proposed settlement started being issued Thursday.
The issue came to light in 2023 when Discover earlier disclosed it had misclassified merchants into higher pricing tiers over a span of 16 years. Discover also faced compliance issues at the time. The issue was severe enough for Roger Hochschild, who joined Discover as chief executive and president in 2018, to leave following the pricing- and compliance-issues revelation. John Owen, a member of the Discover board of directors, took on the interim role, to be followed in 2024 by Michael Shepherd, who was interim Discover CEO when Capital One’s acquisition of Discover closed in May. He is now a member of the Cap One board of directors.
Merchants have until May 18, 2026, to file a payment claim or provide additional information. As is typical, a merchant also can exclude itself from the settlement and seek another resolution, the court says.
The settlement Web site, DiscoverMerchantSettlement.com, includes a detailed FAQ section and information on how merchants can check their Discover merchant identification numbers. The court says any settlement payments will be made once the settlement is approved and becomes final.
