Discover 2015 Annual Report Download - page 67

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participants in the financial markets. We expect regulators to continue taking formal enforcement actions against
financial institutions in addition to addressing concerns through non-public supervisory actions or findings.
The impact of the evolving regulatory environment on our business and operations depends upon a number of
factors including supervisory priorities and actions, the actions of our competitors and other marketplace participants
and the behavior of consumers. Regulatory developments, findings and ratings could negatively impact our business
strategies, require us to limit or change our business practices, limit our product offerings, invest more management
time and resources in compliance efforts, limit the fees we can charge for services, or limit our ability to pursue certain
business opportunities and obtain related required regulatory approvals. For additional information regarding bank
regulatory limitations on acquisitions and investments, see "Business — Supervision and Regulation — Acquisitions and
Investments." For more information on recent matters affecting Discover, see Note 20: Litigation and Regulatory Matters
to our consolidated financial statements. Regulatory developments also could impact our strategies, the value of our
assets, or otherwise adversely affect our businesses.
Compliance expenditures have increased significantly for Discover and other financial services firms, and we
expect them to continue to increase as regulators remain focused on controls and operational processes. We may face
additional compliance and regulatory risk to the extent that we enter into new business arrangements with third-party
service providers, alternative payment providers or other industry participants. The additional expense, time and
resources needed to comply with ongoing regulatory requirements may adversely impact our business and results of
operations.
Consumer Financial Services
The Consumer Financial Protection Bureau ("the CFPB") regulates consumer financial products and services, as
well as certain financial services providers, including Discover. The CFPB is authorized to prevent “unfair, deceptive or
abusive acts or practices” and ensure consistent enforcement of laws so that all consumers have access to markets for
consumer financial products and services that are fair, transparent and competitive. 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. Under its rulemaking authority, the CFPB announced that it is considering rules that will limit the use of
arbitration clauses. For more information, see Note 20: Litigation and Regulatory Matters to our consolidated financial
statements.
Several of our products, including credit cards, private student loans and home loans, are areas of focus of the
CFPB. The CFPB collects detailed account level information from us about credit cards and other products, and is
authorized to collect fines and require consumer restitution in the event of violations. In addition, the CFPB has an online
complaint portal that shows the subject matter of consumers' complaints about financial products, as well as the nature
of financial services providers' responses to each complaint, such as whether requested relief was provided. In June
2015, the CFPB began publishing narratives of complaints made to the CFPB by consumers who opted to have their
complaint narratives made public. The publication through the portal of unverified detailed consumer narratives could
lead to reputational injury of financial institutions. The CFPB's analysis of account data and complaints could inform
future decisions with respect to regulatory, enforcement or examination focus, and influence consumers' attitudes about
doing business with Discover.
Credit Cards
Pursuant to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act"), the CFPB
recently concluded its bi-annual review of the consumer credit card market. The bi-annual review report provided
additional guidance for credit card issuers and concluded that the CARD Act reduced the overall cost of credit. The
report discussed the use of new technology, including the movement of marketing and the opening of new accounts to
digital channels. The CFPB also discussed debt collection practices and the complexity of card agreements and rewards
programs. The cost and availability of credit, credit disclosures and consumer experience with debt collectors continue
to be a focus of the CFPB. We anticipate that the CFPB will propose debt collection regulations that apply to our lending
business in 2016. Courts and legislators also have been focused on the debt collection practices of consumer financial
services providers. The ultimate impact of this increased scrutiny is uncertain at this time.
Private Student Loans
There continues to be significant legislative and regulatory focus on the private student loan market, including by
the CFPB and the Federal Deposit Insurance Corporation (the "FDIC"). This regulatory focus has resulted in an increase