Discover Merchant Settlement Worth up to $1.225 Billion, Check If You Qualify CAPP, Inc. v. Discover Financial Services, No. 1:23-cv-04676

There’s a real chance your business is owed money from Discover — you just missed the window to say so on time. Businesses that accepted or processed Discover credit cards between 2007 and 2023 could qualify for a payment from a class action settlement worth up to $1.225 billion, and the court-approved deadline to file claims passed on May 18, 2026. Late claims may still get a look. Here’s what happened, and what to do now.

Discover Merchant Settlement — Key Facts

Settlement Amount	$540,000,000 minimum – $1,225,000,000 maximum, plus interest
Claim Deadline	May 18, 2026 — passed; late claims accepted but not guaranteed
Who Qualifies	End Merchants, Merchant Acquirers, Payment Intermediaries, 2007–2023
Estimated Payout	$10 minimum base payment; final amount tied to transaction volume
Proof Required	No — Settlement Administrator uses Discover’s own transaction records
Settlement Status	Final approval granted May 20, 2026
Court & Case Number	U.S. District Court, Northern District of Illinois, No. 1:23-cv-04676
Law Alleged	RICO, plus Illinois, New Jersey, New York, and Pennsylvania consumer laws
Administrator	Epiq
Official Claim Site	discovermerchantsettlement.com
Last Updated	July 7, 2026

Who Is Discover and Why Are They Being Sued for Overcharging Merchants?

Discover’s former CEO Roger Hochschild disclosed the misclassification issue during a July 2023 earnings call and resigned weeks later. That timing matters. A company doesn’t usually lose its CEO over a minor billing glitch. Discover later confirmed to regulators that beginning around mid-2007, its card-processing system had incorrectly sorted certain consumer credit cards into its highest merchant pricing tier — the tier meant for commercial cards. That single coding error is the entire case.

What Did Discover Do to Merchants Between 2007 and 2023?

Every card swipe costs the merchant an interchange fee. Consumer cards carry a lower fee. Commercial cards — the ones meant for business purchasing — carry a noticeably higher one. According to reporting based on the FDIC’s enforcement findings, more than 5 million consumer credit cards were mislabeled as commercial cards during this period, and merchants ended up paying roughly 1% more on every affected transaction. That doesn’t sound like much until you multiply it across 17 years and millions of cards.

Three related lawsuits came out of this: CAPP, Inc. v. Discover Financial Services, Lemmo’s Pizzeria, LLC v. Discover Financial Services, and Support Animal Holdings, LLC v. Discover Financial Services, all consolidated in the Northern District of Illinois. Discover has not admitted wrongdoing. It agreed to pay to make the case go away, not because a court ruled against it.

That’s normal for a settlement this size. It doesn’t mean the underlying claim wasn’t real — it means neither side wanted to risk a trial.

Who Qualifies for the Discover Merchant Settlement?

Here’s exactly how to know if this case includes you:

• Businesses that directly accepted a Discover card from a customer between January 1, 2007 and December 31, 2023 (End Merchants)
• Payment processors and acquiring banks that routed Discover transactions during that window (Merchant Acquirers)
• Platforms like payment gateways or aggregators sitting between merchants and Discover (Payment Intermediaries)
• Anyone who received a notice by mail or email from the Settlement Administrator

Certain people and entities listed on Exhibit A to the Settlement Agreement are excluded, and anyone who timely opted out by March 25, 2026 is also excluded.

Related article: Kimberly-Clark U by Kotex Lead Lawsuit, Were You Affected? — Foster v. Kimberly-Clark Corporation, No. 1:25-cv-09736

Discover Merchants Outside Illinois — Are You Still Covered?

Yes. This is a federal, nationwide settlement. Your business doesn’t need to be based in Illinois — it only needs to have processed a misclassified Discover transaction anywhere in the country during the class period.

Not sure if your business qualifies for the Discover merchant settlement or whether a late claim is worth pursuing? A free consultation with a business litigation attorney can help you weigh your options before records get harder to pull.

How Much Can Discover Merchant Settlement Class Members Get?

Every eligible class member is set to receive at least $10, with base payments reduced pro rata if their total exceeds a $50 million aggregate cap, and increased pro rata up to the $540 million guaranteed minimum. The maximum pool, plus interest, tops out at $1.225 billion depending on final claim volume.

Attorneys’ fees are capped at $25 million and litigation expenses at $1 million, both paid separately by Discover on top of the class fund — meaning legal costs don’t eat into what merchants receive. Payments over $600 may appear on a 1099. Check with a tax professional before you file.

The math favors filing even for a small operation. A $10 guaranteed floor for a few minutes of paperwork is not nothing — it’s just not going to change anyone’s year either.

How to File a Late Discover Merchant Settlement Claim

The official window closed, but the door isn’t fully shut.

1. Go to discovermerchantsettlement.com and look for the late-claim or “register without a Claimant ID and PIN” option
2. File using your business’s Taxpayer Identification Number if you never got a notice
3. Contact the Settlement Administrator directly at 1-888-655-3176 or [email protected] to ask whether your specific claim can still be processed
4. Watch for a deficiency notice — the Settlement Administrator has been sending notices about claim deficiencies, and any deficiency notice you receive requires prompt corrective action
5. Save your confirmation number if you’re able to submit

Claims Closed: The court-approved deadline was May 18, 2026. No new claims are being accepted at this time through the standard portal, though the Administrator has indicated late submissions may still be reviewed without a guarantee they’ll count.

Discover Merchant Settlement — Frequently Asked Questions, No. 1:23-cv-04676

Is there still a lawsuit against Discover Financial Services for merchant overcharges?

 No — the court held a Final Approval Hearing on May 20, 2026 and granted final approval of the settlement, so the litigation phase is over. What’s left is claim processing and payment.

Do I need a lawyer to file a Discover merchant settlement claim?

 No. Filing is free and doesn’t require an attorney. A business litigation attorney is worth calling only if your claim is complex or you’re weighing a late filing.

When will Discover settlement payments be sent?

 Payments go out after the settlement is approved, becomes final, and all allocation processing — including any Claim Determination Notice review period — is complete, and appeals could extend that timeline.

What if I missed the Discover claim deadline?

 You may still be able to file late through the settlement site, but the Administrator can’t promise it will be accepted or paid.

Am I part of the Discover merchant lawsuit if I use Stripe or Square? 

Businesses that processed Discover payments through intermediaries like PayPal, Stripe, Square, or Shopify are covered as part of the eligible class.

How much will I get from the Discover settlement?

 There’s no flat number. Payment amounts vary based on how much each class member overpaid, with every class member guaranteed at least $10.

What specific laws does Discover allegedly violate?

 The complaint cited the federal RICO statute, along with the Illinois Consumer Fraud and Deceptive Business Practices Act and similar consumer protection laws in New Jersey, New York, and Pennsylvania.

Is the Discover merchant settlement separate from the Visa/Mastercard settlement?

 Yes. This is separate from the much larger $38 billion Visa/Mastercard merchant interchange fee settlement, and merchants may be eligible for both.

Sources Used in This Discover Merchant Settlement Article

• Official Settlement Site — Discover Merchant Settlement FAQs: discovermerchantsettlement.com
• Court Filing — CAPP, Inc. v. Discover Financial Services, No. 1:23-cv-04676, Joint Declaration with Exhibits, Dec. 1, 2025: discovermerchantsettlement.com (PDF)
• Court Filing — First Amended Complaint, CAPP, Inc. v. Discover Financial Services: discovermerchantsettlement.com (PDF)
• SEC Filing — Discover Financial Services Form 10-K, FY2024: sec.gov

This article is for informational purposes only and does not constitute legal advice. Laws vary by state and individual circumstances differ. For advice about your specific situation, consult a qualified attorney.