I had always had a good feeling about American Express. In fact, at one point I had carried its credit card for nearly 10 years. So I was literally shocked to read that it had been cheating the people who had the credit cards of three of its subsidiaries – American Express Centurion Bank, American Express Travel Related Services and the American Express Bank, FSB.
Thanks to the Utah Department of Financial Institutions
The Utah Department of Financial Institutions, along with the Federal Deposit Insurance Corporation, found that three American Express subsidiaries were violating several consumer protection laws. This matter was turned over to the new Consumer Financial Protection Bureau (CFPB), which has fined American Express $27.5 million. And that’s not the half of it.
$85 million in refunds to consumers
The $27.5 million fine included $14.1 million from the CFPB, $3.9 million from the FDIC, $9 million from the Federal Reserve and $500,000 from the Comptroller of the Currency. In addition, the CFPB has ordered the three American express subsidiaries to refund a total of $85 million to their customers.
Unlawful fees and deceitful sales tactics
In what has been called massive fraud, American Express was found to have violated federal laws regarding deceptive practices in several respects. For example, the CFPB found that the company had used false statements to pressure customers into settling old debts. The customers were told that if they would pay off a part of their debt, American Express would forgive the rest. In addition, American Express was found to have charged late fees on some of its credit cards based on the amount of money owed, which is a violation of a 2009 law that prohibits this kind of practice.
In other cases, prospects for the company’s “Blue Sky” credit card program were told that they would receive bonus points as well as $300 if they signed up for the card. The problem is the people who met these conditions and signed up for the card never received the promised $300.
The company was also found to be unlawfully discriminating against people applying for new cards on the basis of their age. They also did not report to the three credit reporting agencies disputes with customers over billing. In addition, American Express customers were told that if they paid off their old debt, this would be reported to the credit bureaus and their credit scores would improve accordingly. However, it was found that American Express never reported these payments. Plus, if the company had reported them, they were too old to ever appear on their customers’ credit reports.
Full payments to the customers who had been deceived
The three American Express companies have been ordered to fully repay those customers who had been deceived. If the people who were cheated are still American Express customers, they will see a credit on their bills. If they are not still customers, they will receive checks. In addition, the three American express subsidiaries must implement new procedures to make sure that they are in compliance with all consumer protection laws. They will also be compelled to hire independent auditors to make sure they are complying with these laws.
What they can no longer tell customer
The CFPB has also ordered American Express to not try to collect any debts unless they had documentation supporting the fact that the customer really did owe the money. They will also be required to tell customers when they are trying to collect old debt that this will not be reported to the three consumer reporting agencies – `Experian, Trans Union and Equifax−so will not affect their credit ratings.