About 4.7 million customers were billed for the services between December 2007 and August 2011, the period covered by the case. As of February, Discover has nearly 21 million active accounts, according to Nilson Report, an industry tracker.
More than a million cardholders will not get restitution because their purchase did not involve telemarketing, they have already received refunds, or they used Payment Protection, which allows payments to be suspended in case of events such as job loss, natural disaster, or a child's birth.
David Nelms, Discover's chairman and CEO, said in a statement announcing the settlement that the bank had "worked hard to earn the loyalty of our card members, and we are committed to marketing our products responsibly."
The case against Discover is similar to the CFPB's first enforcement action, in July, against Capital One, which agreed to pay about $150 million in refunds and $60 million in penalties.
Fees for Discover's Payment Protection are based on a customer's balance. The other products in question - Wallet Protection, Credit ScoreTracker and Identity Theft Protection - generate monthly fees ranging from $2.99 to $9.99.
Since card issuers already have their customers' billing information, complaints about such add-on products often center on disputes over whether customers realized they were agreeing to purchases. Discovers' customers "never had to provide a credit-card number," said CFPB enforcement director Kent Markus.
Cordray said regulators were reviewing similar practices at other card issuers. "We continue to expect that more such actions will follow," he said.
Discover spokesman Jon Drummond said the bank was not currently selling the add-ons by phone but not giving up on them, either. "Discover intends to continue to offer and market the products," he said.
Contact Jeff Gelles at 215-854-2776 or email@example.com.