The Discover Merchant Settlement is a court-approved class action worth between $540 million and $1.225 billion that resolves claims Discover Financial Services misclassified roughly five million consumer credit cards as commercial cards from 2007 through 2023, causing merchants to pay inflated interchange fees for about 17 years. Judge Steven C. Seeger of the U.S. District Court for the Northern District of Illinois granted final approval on May 20, 2026. The claim filing deadline has passed, and payments are expected to begin in late 2026 or early 2027.
Who Qualifies as a Class Member
The settlement covers three categories of businesses that handled Discover credit card transactions between January 1, 2007, and December 31, 2023:
- End Merchants: businesses or individuals that directly accepted a Discover credit card from a customer for goods or services during the class period.
- Merchant Acquirers: companies that had agreements with Discover to facilitate credit card transactions and were classified under Discover’s rules as an “Acquirer.”
- Payment Intermediaries: entities that processed Discover credit card transactions on behalf of other businesses but do not fall into either of the first two categories.
Merchants who remained in the class and did not opt out by March 25, 2026, are bound by the court’s judgment and release any claims against Discover tied to the misclassified transactions.
How Much You’ll Receive
There is no flat per-merchant payout. Each claimant’s share is calculated from Discover’s own internal transaction data. The settlement administrator, Epiq Class Action and Claims Solutions, uses the estimated interchange fee overcharge tied to each Discover Merchant Identifier (MID) associated with a business. The overcharge itself is the gap between the consumer-card rate (roughly 1.4 percent) and the commercial-card rate (roughly 2.4 percent), which compounds with transaction volume and duration. Merchants who processed more Discover transactions over longer stretches of the class period will generally receive larger allocations.
Every eligible claimant is guaranteed a minimum payment of $10, subject to a $50 million aggregate cap on those base payments. The final size of the fund, and each claimant’s share, depends on the total estimated overcharges, how those overcharges are allocated among class member types, and the number and value of valid claims filed.
The Filing Deadline Has Passed
The court-approved deadline to file a claim was May 18, 2026. Claims could be submitted online at DiscoverMerchantSettlement.com or by mailing a paper claim form, and filing was free. The official settlement website warns that late claims may not be considered. If you did not file by the deadline, contact the settlement administrator directly before assuming you have no options.
The two other key dates in the case have also passed: March 25, 2026, was the deadline to opt out or file a written objection, and May 20, 2026, was the final approval hearing.
When Payments Arrive and How to Track Your Claim
Payments are projected to begin approximately 240 days after final court approval, putting the likely distribution window in late 2026 to early 2027. Before payments go out, Epiq will send each claimant a Claim Determination Notice specifying their calculated “Allocated MID Amount.” The determination process relies on downstream data Epiq is still collecting from acquirers and intermediaries, so final letters are expected to take several months.
If you disagree with your calculated amount, you can challenge it by submitting supporting documentation such as monthly merchant processing statements. To do this, log into the portal at DiscoverMerchantSettlement.com and go to the “My Claims” page. From there you can view the Discover MIDs linked to your account, link additional Claimant IDs to a single business account, upload documents, and respond to any deficiency notices from the administrator. Failing to respond to a deficiency notice or a proof-of-authority request can result in a denied claim, so check the portal regularly once determination letters begin going out.
For questions, the settlement administrator can be reached at 888-655-3176 or Info@DiscoverMerchantSettlement.com. A separate line for payment intermediaries and acquirers is available at 877-535-8067.
What Discover Did to Trigger the Case
Interchange fees are the charges merchants pay every time a customer swipes a credit card, and card networks set different tiers depending on the card type. Commercial cards, meant for business spending, carry higher interchange rates than consumer cards used for personal purchases. Beginning in mid-2007, Discover classified certain consumer credit card accounts into its highest merchant pricing tier, the one reserved for commercial cards. Merchants processing those transactions paid the commercial rate on cards that were standard consumer products.
By the end of 2022, roughly five million consumer cards had been misclassified, and 98 percent of the cards flagged during internal reviews turned out to be incorrectly labeled. Federal regulators later found that senior management knew about the improper classifications but did not correct them. The practice ran for about 17 years before being publicly disclosed in July 2023, when then-CEO Roger Hochschild acknowledged during an earnings call that Discover had “incorrectly classified certain card accounts into our highest merchant and merchant-acquiring pricing tier.”
Three class actions followed. The lead case, CAPP, Inc. v. Discover Financial Services (Case No. 1:23-cv-04676), was filed July 19, 2023, in the Northern District of Illinois, alongside Lemmo’s Pizzeria, LLC v. Discover Financial Services and Support Animal Holdings, LLC v. Discover Financial Services. The cases were consolidated before Judge Seeger in early 2024, and a nationwide settlement was signed on July 1, 2024. Settlement Class Counsel includes Lieff Cabraser Heimann & Bernstein LLP, Dilworth Paxson LLP, and The Kick Law Firm, APC.
Federal regulators pursued their own actions in parallel. On April 18, 2025, the Federal Reserve assessed a $100 million civil money penalty, and the FDIC issued a $150 million penalty plus a mandate that Discover Bank distribute at least $1.225 billion in restitution to affected merchants and intermediaries. Regulators found the misclassification caused roughly $1 billion in merchant harm, with about 90 percent of the excess revenue going to Discover Bank.
Confirming the Settlement Is Legitimate
The Discover Merchant Settlement is real and court-approved. The Final Approval Order and Final Judgment are publicly available on the official settlement website, DiscoverMerchantSettlement.com, and formal court-authorized notices have been sent to affected merchants on a rolling basis since September 2025. Epiq Class Action and Claims Solutions handles all communications. Filing was free, and no third-party service is needed to participate. If you received a notice and want to verify it, call the settlement administrator directly at 888-655-3176 or check your claim status through the official website. Anyone charging a fee to file or “recover” your settlement money is not affiliated with the court-approved process.