The Consumer Financial Protection Bureau, citing illegal student loan and debt collection practices, on Wednesday fined Discover Bank $18.5 million. The bank, a Discover Card affiliate, must refund $16 million to student loan customers and pay a $2.5 million penalty.

Discover Bank overstated the minimum amounts due each month, violated debt collection practices and denied customers information needed to get federal income-tax breaks, according to the CFPB. About 100,000 consumers are eligible for refunds.

“Discover created student debt stress for borrowers by inflating their bills and misleading them about important benefits,” CFPB Director Richard Cordray said in a statement. "Illegal servicing and debt collection practices add insult to injury for borrowers struggling to pay back their loans. Today’s action is an important step in the Bureau’s work to clean up the student loan servicing market."

The CFPB’s order also requires Discover Bank to improve its billing, student loan interest reporting and collection practices. Discover Bank’s student loan affiliates The Student Loan Corp. and Discover Products Inc. also were charged in Wednesday's action. 

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