Monday, October 1, 2012
WASHINGTON — American Express will refund an estimated $85 million to some 250,000 customers for illegal credit card practices under a settlement announced today by the Consumer Financial Protection Bureau (CFPB). The company will also pay a civil monetary penalty of $27.5 million.
The CFPB said a federal investigation found American Express had violated consumer protection laws in its marketing, enrollment, billing, and debt collection practices at various times between 2003 and 2012.
The bureau said three American Express subsidiaries charged unlawful late fees, misled customers about enrollment benefits and debt collection, unlawfully discriminated against applicants on the basis of age, and failed to report consumer disputes to credit bureaus.
Consumers Union, the policy and advocacy division of Consumer Reports, praised today’s action by the CFPB, the latest in a series of enforcements against credit card firms for deceptive practices announced this year.
Pamela Banks, senior policy counsel at Consumers Union, said, “The CFPB is clearly putting credit card companies on notice that, if you break you law, you’re going to be held accountable. This is why we pushed for the creation of a watchdog like this, to stand up for consumers when they get ripped off.”
Banks added, “If you’re one of the 250,000 customers who are due a refund, you won’t have to take any action. You should see a credit in your account, or if you no longer have an AmEx card, the company is obligated to send you a refund check.”
The CFPB said the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions discovered the illegal activities during a routine examination of an American Express subsidiary, the American Express Centurion Bank. The FDIC transferred portions of the investigation to the CFPB when the Bureau opened last year and the agencies pursued the matter in a joint effort. The CFPB said it later concluded many of the same violations that occurred at American Express Centurion Bank also took place at American Express Travel Related Services Company, Inc. and American Express Bank, FSB.
Media contact: David Butler or Kara Kelber, 202-462-6262; Michael McCauley, 415-431-6747