Regulators Fine American Express For Consumer Protection Violations

by Mercator Advisory Group 0

American Express must refund $85 million to customers and pay $27.5 million in civil money penalties for a variety of infractions the Consumer Financial Protection Bureau announced on Monday. Violations include age discrimination, illegal fees, and deceptive debt collection.

The Consumer Financial Protection Bureau (CFPB) announced a public enforcement action with orders requiring American Express to refund an estimated $85 million to approximately 250,000 customers. At every stage of the consumer experience, from marketing to enrollment to payment to debt collection, several American Express bank programs violated consumer protection laws.

By the Numbers
• $85 million: The estimated total refund to American Express consumers.
• 250,000: The approximate number of consumers receiving a refund.
• $27.5 million: The civil monetary penalty that American Express will be fined by the CFPB, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve Board), and the Office of the Comptroller of the Currency. Read more here.

The order was issued along with the Federal Deposit Insurance Corp. and the Federal Reserve Board, which have jurisdiction over various American Express business unites. The move is the thid major enforcement action for the newly formed Bureau.

The announcement on Monday marked the third enforcement action ever issued by the CFPB since the new consumer protection watchdog was created under the 2010 Dodd-Frank Act. All three actions have been issued against large credit card providers, and have come out in a span stretching just over two months. Unlike the actions against Capital One and Discover, which were focused on the marketing of payment protection plans, the enforcement order against AmEx was not related to a single practice. Read more here.

The move shows that the agency is focused on credit cards, but that it is moving to assert itself as a force in regulating consumer financial services.

Click here to read more from the CFPB’s decision.