Discover 2015 Annual Report Download - page 38

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limit for a period of time our ability to enter into certain types of acquisitions and make certain types of investments. For
more information on recent matters affecting Discover, see Note 20: Litigation and Regulatory Matters to our
consolidated financial statements. For information on the challenging regulatory environment, see "Risk Factors."
In addition, certain acquisitions of our voting stock may be subject to regulatory approval or notice under U.S.
federal or Delaware state law. Investors are responsible for ensuring that they do not, directly or indirectly, acquire
shares of our stock in excess of the amount that can be acquired without regulatory approval under the Change in Bank
Control Act, the Bank Holding Company Act and the Delaware Change in Bank Control provisions, which prohibit any
person or company from acquiring control of us without, in most cases, the prior written approval of each of the FDIC,
the Federal Reserve and the Delaware Commissioner.
Consumer Financial Services
The relationship between us and our U.S. customers is regulated extensively under federal and state consumer
protection laws. Federal laws include the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Gramm-Leach-Bliley Act, the CARD Act and the Dodd-Frank Act. These and other federal laws,
among other things, prohibit unfair, deceptive and abusive trade practices, require disclosures of the cost of credit,
provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report
information, provide financial privacy protections, require safe and sound banking operations, restrict our ability to
raise interest rates, and subject us to substantial regulatory oversight. The CFPB has rulemaking and interpretive
authority under the Dodd-Frank Act and other federal consumer financial services laws, as well as broad supervisory,
examination and enforcement authority over large providers of consumer financial products and services, such as
Discover. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations — Regulatory Environment and Developments — Consumer Financial Services."
State and, in some cases, local laws also may regulate in these areas, as well as in the areas of collection
practices, and may provide other additional consumer protections. Moreover, our U.S. subsidiaries are subject to the
Servicemembers Civil Relief Act (the "SCRA") as well as the Military Lending Act (the "MLA"), which protects persons
called to active military service and their dependents from undue hardship resulting from their military service. The
SCRA applies to all debts incurred prior to the commencement of active duty (including credit card and other open-end
debt) and limits the amount of interest, including service and renewal charges and any other fees or charges (other than
bona fide insurance) that is related to the obligation or liability. The MLA applies to several of our financial products,
including credit cards, private student loans and personal loans. Among other requirements, it imposes an interest rate
cap for loans made to active duty servicemembers and their dependents, requires additional disclosures, and prohibits
Discover from requiring MLA protected consumers to submit disputes to arbitration. Our student loan and personal loan
products must comply with these new requirements by October 3, 2016 while credit card products must comply by
October 3, 2017.
Violations of applicable consumer protection laws can result in significant potential liability in litigation by
customers, including civil monetary penalties, actual damages, restitution and attorneys' fees. Federal banking
regulators, as well as state attorneys general and other state and local consumer protection agencies, also may seek to
enforce consumer protection requirements and obtain these and other remedies. Further violations may cause federal
banking regulators to deny, or delay approval of, potential acquisitions and investments. See "— Acquisitions and
Investments."
We are subject to additional laws and regulations affecting mortgage lenders. Federal, state and, in some
instances, local laws apply to mortgage lending activities. These laws generally regulate the manner in which mortgage
lending and lending-related activities are conducted, including advertising and other consumer disclosures, payments
for services and recordkeeping requirements. These laws include the Real Estate Settlement Procedures Act, the Fair
Credit Reporting Act, the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Home
Mortgage Disclosure Act and various state laws. The CFPB has indicated that the mortgage industry is an area of
supervisory focus and that it will concentrate its examination and rulemaking efforts on the variety of mortgage-related
topics required under the Dodd-Frank Act, including the steering of consumers to less favorable products,
discrimination, abusive or unfair lending practices, predatory lending, origination disclosures, minimum mortgage
underwriting standards, mortgage loan origination compensation and servicing practices. The CFPB has published
several final rules impacting the mortgage industry. For more information, see “Management's Discussion and Analysis
of Financial Condition and Results of Operations — Regulatory Environment and Developments — Consumer Financial
Services — Mortgage Lending.”