Consumer Financial Protection Bureau Requires AMEX to Refund Millions
Our consumer rights attorneys in Miami know that big banks and creditors sometimes do dishonest things to defraud consumers of money, to charge consumers more than they should or to obscure the terms of deals that they are trying to convince consumers to enter into. Yet another example of this type of behavior can be seen in the actions of American Express, which violated consumer protection laws through illegal credit card practices.
The Consumer Financial Protection Bureau (CFPB) has recently taken action against American Express in light of these violations. A multi-part federal investigation revealed that American Express had engaged in violations of the law at every step of the customer experience, from marketing its cards to collecting debts, and now AMEX will have to pay for this bad behavior. The credit card company’s three subsidiaries that engaged in the wrongful practices are being required to refund an estimated $85 million to around 250,000 customers.
Consumer Protection Law Violation Leads to CFPB Action
The illegal actions taken by American Express first came to the attention of regulators when the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) launched a routine examination of the American Express Centurion Bank, an American Express Subsidy. The FDIC then transferred a part of the investigation to the brand new CFPB, which broadened the investigation to also include American Express Bank FSB, and the American Express Travel Related Services Company.
Investigators found that problems had occurred from 2003 to 2012 and included:
- Deceptive advertising and marketing of the American Express “Blue Sky” credit card program that promised a $300 bonus for customers who met certain qualifications and that did not deliver.
- Unlawful charging of late fees.
- Unlawful discrimination based on age when applicants tried to apply for credit.
- Failing to report disputes from consumers to the consumer credit reporting agencies in violation of the Fair Credit Reporting Act
- Misleading customers about debt collections, suggesting that there were benefits to repaying old debt that were not accurate.
After these violations came to late, American Express agreed to refund customers that experienced harm. This includes customers misled into repaying old debt; customers who paid illegal late fees and customers who didn’t get their $300. If a customers was denied a new credit card because debt wasn’t forgiven as promised, American Express must provide a pre-approved offer for a new card. The company also agreed to end the deceptive and illegal practices, to undergo a review by independent auditors to ensure the company is complying with consumer protection laws, and to inform consumers of their debt collection rights. Finally, American Express will pay civil penalties of $27.5 million.
Hopefully, this action will help to ensure that American Express does not engage in dishonest business practices in the future to harm consumers. The action may also help to send a message to credit card companies, banks and other lending institutions that the CFPB is serious about investigating fraud and standing up for consumers. Those who are harmed by dishonest debt collection practices or by unlawful actions of creditors and big banks need to understand their rights and remedies so they can take advantage of the legal protections that are available.
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