AmEx to refund customers $85M
WASHINGTON, Oct. 1, 2012 (LID) — American Express Company (NYSE: AXP) will refund $85 million to customers to resolve regulators’ claims of alleged deceptive practices involving about 250,000 customers, officials said Monday.
In all, the company will pay $112.5 million to settle claims by the federal Consumer Financial Protection Bureau (CFPB) of alleged nefarious practices between 2003 and 2012 by three American Express subsidiaries.Cordray
A multiagency investigation and subsequent enforcement action alleged that American Express Centurion Bank, American Express Travel Related Services Company and American Express Bank FSB illegally charged consumers late fees, discriminated against credit applicants older than 35 and misled consumers about bogus rewards for card use.
American Express Centurion Bank’s “Blue Sky” travel-reward program, for instance, offered consumers a non-existent $300 reward, according to an investigative team that included the CFPB, the Office of the Comptroller of the Currency and the Utah Department of Financial Institutions.
“Several American Express companies violated consumer protection laws and those laws were violated at all stages of the game–from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt,” CFPB Director Richard Cordray said in a statement.
The $112.5 million settlement includes a $27.5 million penalty to go to the CFPB, the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve and the Office of the Comptroller of the Currency, officials said.
New York-based American Express, in settling with regulators, has not admitted to the alleged wrongdoing.
The CFPB was created by the Wall Street Reform and Consumer Protection Act of 2009 (Pub.L. 111-203), the so-called Dodd-Frank Act, to supervises areas of the financial-services market not closely watched by regulators.
- Information on the enforcement action against American Express Company is available on the CFPB website, at http://www.consumerfinance.gov/pressreleases/cfpb-orders-american-express-to-pay-85-million-refund-to-consumers-harmed-by-illegal-credit-card-practices.