Discover Class Action Says Bank Takes Payments Without Consent

A California man alleges Discover has been unlawfully taking recurring payments from consumers’ bank accounts without their consent.

Plaintiff Matthew Yocum says that to collect payments on debts, Discover Bank makes a practice of setting up recurring drafts from debtors’ bank accounts without first getting the proper written and signed authorization from those debtors.

Yocum alleges Discover’s actions violate the federal Electronic Funds Transfer Act. The EFTA covers electronic transfers of funds “authorized in advance to recur at substantially regular intervals.”

It says that a “preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing.” The EFTA also requires that the consumer be provided a copy of that authorization, Yocum says.

The Discover class action lawsuit also alleges violations of Regulation E, a regulation promulgated by the Federal Reserve Board. The language of Regulation E parallels the Electronic Funds Transfer Act provision that Yocum refers to.

Commentary on the regulation by the Board says that “[t]he authorization process should evidence the consumer’s identity and assent to the authorization.” The Board also says that to be valid, an authorization must be “readily identifiable as such and the terms of the preauthorized transfer [must be] clear and readily understandable.”

Without getting any such authorization from consumers, and without providing them with any copy of such an authorization, Yocum claims Discover debited Class Members’ bank accounts on a recurring basis.

Yocum alleges Discover called him in October in an attempt to collect a debt. Yocum says that at first he began to give the caller his debit card number to use for a single, non-recurring payment. But almost immediately after that, Yocum says he told the caller to cancel the payment.

However, after that call, and despite Yocum’s alleged cancellation of the transaction, the plaintiff claims that Discover began withdrawing funds from Yocum’s account on a recurring basis.

Yocum claims Discover has made many such debits on his account since then and continues to do so through the present. He says he never authorized Discover to withdraw recurring payments from his account, and alleges Discover never informed him that his account information would be retained for future payments.

In his Discover class action lawsuit, Yocum seeks to represent a nationwide Class consisting of all persons in the U.S. whose bank accounts Discover debited without first obtaining a written authorization, signed or similarly authenticated, to make the electronic funds transfer within one year prior to the filing of this Discover class action lawsuit.

He believes Class Members will number in the hundreds or possibly more.

The plaintiff seeks a court order certifying the proposed Class with himself as Class Representative. He also seeks an award of statutory damages of $1,000 per Class Member, plus actual damages, court costs, attorneys’ fees, and interest.

Yocum is represented by attorneys Todd M. Friedman and Adrian R. Bacon of the Law Offices of Todd M. Friedman, P.C.

The Discover Bank Unauthorized Debit Class Action Lawsuit is Matthew Yocum v. Discover Bank, Case No. 5:16-cv-01682, in the U.S. District Court for the Central District of California.