A proposed class action settlement has been reached to resolve three related lawsuits against Discover Financial Services. The lawsuits allege that since 2007, Discover misclassified certain consumer credit cards as commercial credit cards, resulting in merchants and other parties incurring excessive interchange fees. This misclassification issue, which began in 2007, placed certain credit card accounts into Discover's highest merchant and merchant acquirer price tier, leading to overcharges. While Discover denies the claims in the lawsuits, a settlement for $1.2 billion has been reached. This settlement impacts businesses, merchants and others who are alleged to have incurred excessive interchange fees.

Under the proposed settlement, Discover has agreed to pay a substantial sum to resolve claims related to card misclassification. Eligible Settlement Class Members who submit valid claims will receive payments from a settlement fund that Discover has agreed to establish, ranging from $500 million to $1.2 billion. The settlement payment for each claimant will be determined based on several factors. These include the total estimated interchange fee overcharge for each Discover merchant identifier (MID) associated with the claimant, how interchange fee charges for each MID were allocated among entities associated with the same MID, and the total aggregate dollar amount of all settlement payments.

The "Settlement Class" is defined as: All End Merchants, Merchant Acquirers, and Payment Intermediaries involved in processing or accepting a Misclassified Card Transaction during the period from January 1, 2007 through December 31, 2023. Excluded from the Settlement Class are certain people and entities listed on Exhibit A to the Settlement Agreement.