Widow finds out credit card protection is illegal in Tenn.

After 5 years of payments, widow finds out credit card protection plan is illegal in Tennessee

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"To me, they sold it under false pretense. All this time, nearly five years now, we paid," Norma Davis said. "To me, they sold it under false pretense. All this time, nearly five years now, we paid," Norma Davis said.
If you read the payment protection plan fine front, you'll see that the program is not available in Tennessee. If you read the payment protection plan fine front, you'll see that the program is not available in Tennessee.
The Davises paid thousands to Discover just in fees. The Davises paid thousands to Discover just in fees.

By DON DARE
6 On Your Side Consumer Investigator

WALLAND (WATE) - There are a staggering number of credit cards held by people across America. Industry records show nearly 610 million credit cards are in circulation.

Some companies offer their customers what are called payment protection plans for a monthly fee. But if you check closely, you cannot buy that insurance in Tennessee.    

Under the plans, if the owner of the card becomes disabled, involuntarily becomes unemployed or dies, any outstanding debt would be paid off.

But in Tennessee, the state does not allow payment protection plans.

A retired couple from Walland, however, didn't know that when they signed up for the program.

Norma Davis says she had a wonderful life with her late husband, Chester. They were married for 59 years.

The retired Air Force NCO served in Vietnam in the early 1960s, and by the time he retired and returned home to East Tennessee, he and his family had lived around the world.

"He took good care of me," Norma said.
 
Davis remembers her husband taking out a Discover card four years ago and paying extra for the card's payment protection plan.

"That would have been my security and we've always done that. This is what I paid for the protection plan in 2009," she said.

By her family's calculation, Chester never missed paying the protection plan's monthly fee.

Davis still has all the receipts from the payments, and when he died in April, nearly $3,200 had been paid into the plan.

"After he passed away, then they told me he don't have no death benefits," she said.

But that wasn't Norma's understanding of the program.

"If something happened to him, if we owed something on it, it would be paid off," she said.

Chester did not qualify for the plan, nor does anyone in Tennessee.

On Discover card's website, the payment protection plan is not available in Tennessee and several other states, as well as several American territories.

In a letter sent two years ago, Chester was informed the terms of his payment protection plans were being upgraded.

"To me, they sold it under false pretense. All this time, nearly five years now, we paid," she said.

The state's department of insurance has taken the position that debt cancellation contracts are the same as insurance contracts and laws were written banning such plans in the Volunteer State since the mid-1980s.

"They need to inform people that this is not valid," Davis said.

6 On Your Side reached out to Discover card, asking Chester was charged the fee when he didn't qualify for the benefit.

We also asked whether Norma would be reimbursed for the protection plan charges. A week after our inquiries, Norma said an executive from Discover card called her.

To her surprise, the company settled the dispute by paying off the entire amount owed, a little over $14,000.

"He said, 'I've got good news.' I said, 'You do?' He said, 'The debt is paid in full.' I said, 'We got a good God,'" she said, laughing. "That's what I told him."

Davis says the executive from Discover card who talked with her on the phone apologized that her late husband had not been informed that the state of Tennessee does not recognize payment protection plans.

When we checked with the state, there have been two different attorney general opinions over this issue, and in both cases, the attorney general said debt cancellation agreements are not allowed in Tennessee. 


You can see Don Dare's 6 On Your Side reports every Monday and Wednesday on 6 News at 5:00.

If you have a consumer question, send Don an email at ddare@wate.com or call his 6 On Your Side Hotline at (865) 633-5974.

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