Discover 2009 Annual Report Download - page 20

risk accounts, as determined by statistically derived predictive models, telephone contacts may begin as soon as the
account becomes past due. Lower risk customers are typically contacted by letter and further collection efforts are
determined by behavioral scoring, financial exposure and the lateness of the payment.
We reevaluate our collection efforts and consider the implementation of other techniques, including internal collection
activities, use of collections agencies and legal action, as a customer becomes increasingly delinquent. The timing and
choice of channel utilized are subject to a recovery optimization strategy that encompasses factors such as cost and
duration against expected recovery effectiveness. We limit our exposure to delinquencies through controls within the
authorizations system and criteria based account suspension and revocation. In situations involving customers with
financial difficulties, we may enter into arrangements to extend or otherwise change payment schedules, lower their
interest rates and/or waive fees to aid customers in becoming current on their obligations to us. These arrangements are
designed to help bring accounts out of delinquency or overlimit exposure.
Credit card loans are charged off at the end of the month during which an account becomes 180 days contractually
past due. The only exceptions are bankrupt accounts, deceased customers, accounts on payment hardship or settlement
programs, and fraudulent transactions, which are charged off earlier.
Customer Service
We currently manage over 80 million annual inbound customer service requests through calls placed to
1-800-Discover and inquiries through self-service channels such as chat, e-mail and interactive voice response. For calls
placed to 1-800-Discover, we seek to answer calls within 60 seconds or less and to provide “one-call resolution.”
We perform the functions required to service and operate customers’ credit accounts, application processing, new
account fulfillment, transaction authorization and processing, customer billing, payment processing, customer service and
collection of delinquent accounts. We also work closely with some external vendors to solicit new account applications
and to cross sell products. We believe that close management of these functions reduces our customer attrition and is cost-
effective.
Designed around customer and account manager needs, our technology and systems enable our account managers to
quickly access information in a manner that supports accurate and timely resolution of inquiries. We develop and
maintain our infrastructure solutions with the flexibility to adapt quickly to meet customer expectations and needs. In
addition to our systems, we invest in our people, providing them with the training and work environment that facilitates
their ability to build strong customer relationships.
Processing Services
Our processing services cover four functional areas: card personalization/embossing, print/mail, remittance
processing and document processing. Card personalization/embossing is responsible for the embossing and mailing of
plastic credit cards for new accounts, replacements and reissues, as well as gift cards. Print/mail specializes in statement
and letter printing and mailing for merchants and customers. Remittance processing, currently a function outsourced to a
third-party vendor, handles account payments and check processing. Document processing handles hard-copy forms,
including product enrollments and new account applications.
Discover Card Terms and Conditions
The terms and conditions governing our credit card products vary by product and change over time. Each credit card
customer enters into a cardmember agreement governing the terms and conditions of the customer’s account. Discover
card’s terms and conditions are generally uniform from state to state. The cardmember agreement permits us, to the
extent permitted by law, to change any term of the cardmember agreement, including any finance charge, rate or fee, or
add or delete any term of the cardmember agreement, with notice to the customer as required by law. The customer has
the right to opt out of certain changes of terms and pay their balance off under the unchanged terms. Each cardmember
agreement provides that the account can be used for purchases, cash advances and balance transfers. Each Discover
card account is assigned a credit limit when the account is initially opened. Thereafter, individual credit limits may be
increased or decreased from time to time, at our discretion, based primarily on our evaluation of the customer’s
creditworthiness. We offer various features and services with the Discover card accounts, including the Cashback Bonus
reward described under “– Marketing – Rewards/Cashback Bonus.”
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