Discover Financial Services has agreed to pay more than $1.2 billion to settle a class action lawsuit alleging the company systematically misclassified consumer credit cards as commercial cards, causing merchants and payment intermediaries to pay elevated interchange fees over more than 16 years [1]. The settlement covers transactions processed between Jan. 1, 2007, and Dec. 31, 2023 [1].
At the center of the dispute is interchange, the per-transaction fee that card networks assess on merchants each time a card is processed. Commercial card transactions typically carry higher interchange rates than consumer card transactions. Plaintiffs alleged that Discover improperly routed consumer cards into commercial categories, inflating costs for merchants who had no practical ability to detect or contest the classifications at the point of sale [1]. The misclassification theory tracks a litigation pattern that has targeted card networks and issuers for more than a decade, with plaintiffs arguing that opaque fee structures deprive merchants of the rate transparency they are owed under network rules and, in some formulations, under federal antitrust principles [1].
The settlement class encompasses merchants and payment intermediaries that accepted Discover-branded cards during the covered period and absorbed fees on misclassified transactions [1]. Eligible claimants may file for a share of the fund during the May 2026 claims window [1]. The $1.2 billion figure places the agreement among the larger interchange-related settlements in federal litigation history, though it remains below the multibillion-dollar Visa-Mastercard interchange settlement that courts have evaluated across multiple rounds of litigation.
Court approval of the settlement terms remains a necessary procedural step before any funds are distributed. No objection deadline or final approval hearing date was included in available sources. Merchants who processed Discover card transactions during the class period and have not yet filed a claim should confirm their eligibility and submission deadlines through the settlement administrator before the current claims period closes [1].