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Home » Cards & Digital Payments Insights » Morning Briefing: Discover accused of illegal practices related to student loans

Morning Briefing: Discover accused of illegal practices related to student loans

Morning News

Discover Financial Services is to refund tens of thousands of student loan borrowers after being hit with $18.5 million in penalties for overstating borrowers' debts and illegally harassing them to repay.

The Consumer Financial Protection Bureau said Discover listed higher minimum payments than those outlined in the original loan terms and did not give customers information they needed to get tax deduction for the interest paid on loans.

"Discover created student debt stress for borrowers by inflating their bills and misleading them about important benefits," CFPB Director Richard Cordray said. "Illegal servicing and debt collection practices add insult to injury for borrowers struggling to pay back their loans."

Which? claims contactless card security flaw

Consumer advocacy group Which? says it has used a card reader to reveal a security flaw in contactless cards that could be exploited by thieves to make online purchases.

Researchers for the company were able to remotely steal key details from a contactless card and then purchase items including a £3,000 TV. It did so after "easily and cheaply acquiring contactless card-reading technology from a mainstream website".

Which? tested six debit and four credit cards. "Using an easily obtainable reader and free software to decode data, we were able to read the card number and expiry date from all 10 cards," it said. "We were also able to read limited details of the last 10 transactions, although no cards revealed the CVV security code (the number on the back).

Despite not being able to access the CVV code and providing a false name and address, the researchers were able to make online purchases.

AmEx second-quarter profit drops

American Express reported that its second-quarter profit fell by 3.7 percent as card-spending growth slowed and revenue declined.

Net income for the period fell by 3.7 percent to $1.47 billion from $1.53 billion for the second quarter of 2014.

HSBC to agree sale of Turkish unit to ING

HSBC is reported to be set to agree to sell its Turkish business to Dutch lender ING Group for around $700 million-$750 million. HSBC is selling the money-losing business as part of its global drive to cut costs and assets, boost profitability and reduce complexity.

Credit Suisse beats second-quarter expectations

Credit Suisse posted earnings ahead of expectations and improved its capital cushion and the bank's new chief executive Tidjane Thiam took the opportunity to say that the bank would set out a new strategy later this year.

"The management team and I have begun to evaluate how to best evolve the bank through an in-depth strategic review," he said. "Before the end of the year, we will set out a strategy and business model that will allow us to achieve profitable and sustainable growth."

Bank of America CFO goes in shake-up

Having recently been accused by regulators of mishandling its stress test submission, Bank of America is parting company with CFO Bruce Thompson, according to an internal memo. Thompson had previously been viewed as a possible heir to chief executive Brian Moynihan.

The bank also revealed that David Darnell, a vice chairman who oversaw the wealth-management division, is retiring.

Martin Wheatley's 'unfinished business'

Ousted FCA chief executive has said he had "unfinished business" with the regulator and was disappointed to be moving on. Addressing an ill-tempered FCA annual public meeting, Wheatley said: "I am disappointed to be moving on and I do with a sense of unfinished businesses."

Wheatley's role will be temporarily filled by Tracey McDermott, a senior FCA official.

NY regulator focuses on bank-backed messaging service

New York's banking regulator has asked the firm behind a new instant messaging service supported by Wall Street's biggest banks about its document retention policies.

Symphony Communication has been asked to provide information on the data deletion, end-to-end-encryption and open source features of its product.

RBS 'to launch new probe into treatment of small businesses'

RBS has asked external advisers to investigate its treatment of small business customers in a probe that will run alongside an FCA investigation into the same issue.

The FCA investigation is looking into allegations that RBS directed small firms into its turnaround division so it could charge higher fees and interest and take control of their assets.

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