American Express has consented to refund $85 million to customers and pay $27.5 million in fines to the Consumer Financial Protection Bureau and several other government organizations. The business was sued for wrongdoing that ran afoul of consumer financial regulations and is the third charge card business to be sued by the fledgling CFPB. Source of article:
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Many other card companies in court
The CFPB is not wasting much time getting stuck in and performing the task that it was created to do. Apart from creating brand new regulations to better defend customers and proposing reforms, it has also started lodging lawsuits against financial service providers that have fallen afoul of laws, in conjunction with other federal companies.
Credit card businesses have thus far been first in the firing line. Suits involving the Consumer Financial Protection Bureau have been brought against Discover and Capital One, according to NBC News, both resulting in settlements in excess of $200 million, much of going to refunding consumers.
Another suit was just recently settled with American Express too, according to CBS. However, the lawsuit did not just contain the CFPB. There were also complains from the Federal Reserve, regulators in Utah State, the Federal Deposit Insurance Company, and the Office of the Comptroller of Currency.
Cash handed back
American Express is in trouble for breaking multiple laws, including failing to report billing disputes and laws about debt collection and reporting. It also charged late fees over legal limits and made false claims about rewards. Also, applicants over the age of 35 were discriminated against.
American Express consented to refund $85 million to customers and pay $27.5 million in fines.
One issue was with subsidiary American Express Centurian Bank who never gave customers the $300 reward guaranteed for signing up for an American Express “Blue Sky” cad. CBS explained that the businesses were charging late charges depending on a percentage too, according to CNN. The problem with that was that they were charging more than already established limits.
Age was an enormous factor in the credit scoring system at American Express Centurian Bank. That is not legal because it is considered discrimination.
Old debt practices also cited
American Express, American Express Bank and American Express Centurian Bank also told some customers that they could improve credit ratings by paying down debts which were at least 7 years old, which do not impact credit ratings. These violations, according to CBS, are said to have been going on from 2003 to this year.
In March 2013, about 250,000 people will get part of the $85 million refunds, according to NBC News.
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