Discover 2015 Annual Report Download - page 57

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Current and proposed laws and regulations addressing consumer privacy and data use and security could affect the
competitiveness of our products and increase our costs.
Legal or regulatory pronouncements relating to consumer privacy, data use and security affect our business. We
are subject to a number of laws concerning consumer privacy and data use and security. Due to recent consumer data
compromise events in the United States, which resulted in unauthorized access to payment card data of millions of
customers, these areas have become a focus of the executive administration, Congress, state legislators and banking
regulators. Developments in this area, such as new laws, regulations, regulatory guidance or enforcement actions, could
result in new or different requirements on Discover and other card issuers or networks that could increase costs or
adversely affect the competitiveness of our credit card or debit card products. See the discussion on recent security
developments in “Management’s Discussion and Analysis of Financial Condition and Results of Operations —
Regulatory Environment and Developments — Payment Networks” for more information. In addition, failure to comply
with the privacy and data use and security laws and regulations to which we are subject, including by reason of
inadvertent disclosure of confidential information, could result in fines, sanctions, penalties or other adverse
consequences and loss of consumer confidence, which could materially adversely affect our results of operations,
overall business and reputation.
Litigation and regulatory actions could subject us to significant fines, penalties and/or requirements resulting in
increased expenses.
Businesses in the consumer banking and payment services industries have historically been subject to significant
legal actions, including class action lawsuits and commercial, shareholder and patent litigation. Many of these actions
have included claims for substantial compensatory, statutory or punitive damages. While we have historically relied on
our arbitration clause in agreements with customers to limit our exposure to consumer class action litigation, there can
be no assurance that we will continue to be successful in enforcing our arbitration clause in the future. Legal challenges
to the enforceability of these clauses have led most card issuers, and may cause us, to discontinue their use. There have
been bills pending in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses in some or all
consumer banking products. Also, the Dodd-Frank Act authorized the CFPB to conduct a study on pre-dispute
arbitration clauses and, based on the study, potentially limit or ban arbitration clauses. On March 10, 2015, the CFPB
released its report to Congress on pre-dispute arbitration as required by the Dodd-Frank Act. On October 7, 2015, the
CFPB published a potential rulemaking on arbitration agreements that would (i) effectively ban providers of consumer
financial services from using arbitration clauses to prevent class action cases and (ii) require records of all other
arbitrations to be provided to the CFPB for potential publication on its website. The timing and provisions of any final
rule are uncertain at this time. Further, we are involved in pending legal actions challenging the use of our arbitration
clause. In addition, we have been and may again be involved in various actions or proceedings brought by
governmental regulatory and enforcement agencies, which could harm our reputation, require us to change our
business activities and product offerings, or subject us to significant fines, penalties, customer restitution or other
requirements, resulting in increased expenses. For example, complying with our agreements with the Federal Reserve
and the FDIC consent order related to our anti-money laundering program have caused us to incur significant expenses.
See Note 20: Litigation and Regulatory Matters to our consolidated financial statements for more information on current
matters affecting Discover.
Special Note Regarding Forward-Looking Statements
This annual report on Form 10-K and materials we have filed or will file with the SEC (as well as information
included in our other written or oral statements) contain or will contain certain statements that are forward-looking
within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and
results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as
“expects,” “anticipates,” “believes,” “estimates” and other similar expressions or future or conditional verbs such as
“will,” “should,” “would” and “could” are intended to identify such forward-looking statements. You should not rely
solely on the forward-looking statements and should consider all uncertainties and risks throughout this annual report
on Form 10-K, including those described under “Risk Factors.” The statements are only as of the date they are made,
and we undertake no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in our
forward-looking statements include the following: