American Express To Pay Consumers Back Millions

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Processing PaymentsDo you have an account with American Express Centurion Bank or American Express Bank?

If so, you may soon be one of the estimated 250,000 customers who will receive part of an $85 million  refund from the bank as repayment for their deceptive practices from 2003 to 2012. In addition to the refund, American Express will also pay a $27.5 million penalty.

American Express’ Misdeeds

American Express has recently found itself under the scrutiny of the Consumer Financial Protection Bureau for some of its subsidiaries’ deceptive acts and illegal fees. Some of the offenses include:

  • Telemarketers telling potential customer that if they signed up for the Blue Sky credit card offered through American Express Centurion Bank that they would receive a $300 sign up bonus, which new customers never received;
  • Charging late fees that were higher than those set by law. This occurred at both American Express Centurion Bank and American Express Bank;
  • Discriminating against older customers (those 35 and older) by using a discriminatory credit scoring system at American Express Centurion Bank for those applying for new accounts;
  • Telling customers that by paying off old debt they would improve their credit score. The problem? The three subsidiaries didn’t notify the credit bureaus of the changes, and in some cases, the debt that was being paid off was over 7 years old and would have no impact on credit scores even if it was reported.

The Consumer Financial Protection Bureau (CFPB) enforces consumer lending laws and was responsible for investigating American Express’ subsidiaries in addition to the Utah Department of Financial Institutions. The CFPB, the Federal Deposit Insurance Corp., the Federal Reserve, and the Office of the Comptroller of the Currency will all split the $27.5 million fine American Express must pay.

Other Banks Giving Refunds  and Paying Fines

The Consumer Financial Protection Bureau has been busy in the last few months cracking down on banks. Just recently Discover Bank was fined $14 million and had to refund $200 million to 3.5 million consumers for deceptive practices. Namely, telemarketers convinced customers that such extras as identity theft protection, credit score tracking, wallet protection and payment protection were free. Individual consumers are expected to receive approximately $57 for the fees they paid.

In addition to American Express and Discover, Capital One was issued a hefty fine and required to refund money to consumers. Capital One’s issues also centered around extras such as payment protection and credit score monitoring. Capital One’s representatives pressured consumers into buying these products and also mislead customers by sometimes telling them these products would improve their credit rating. Some customers were enrolled without their consent. Capital One had to pay a $60 million penalty and refund $140 million to customers.

Each of these banks was reprimanded in the last few months. How many more banking heavy hitters will be punished before banks change their ways, or is it simply more profitably, even with the possibility of fines and repayments, to continue practicing deception?

Are you eligible for any of these refunds?

(Photo: proimos)

{ 7 comments, please add your thoughts now! }

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7 Responses to “American Express To Pay Consumers Back Millions”

  1. Matt says:

    Amercian Express is a great company. I hate to see the economy stagnate like this by more regulation and overzealous DC hacks.

    Look, I’m all for preventing corporate misdeeds, but if you can’t control your own spending and/or fail to take the time to fully understand the offer, you shouldn’t get a credit card. When will people realize that protecting the lazy and inept ultimately hurts all of us?

    And, no, I don’t work for Amex.

  2. Dee says:

    Matt, I like you feedback…as I have never had one problem with AMEX and when my credit card got hacked, they were great to work with. I pay all my credit cards off every month and never overspend…it is not worth spending beyond my means. I don’t work for AMEX either. 😉

  3. Donna Rammer says:

    Glad that got finally caught doing bad things to good people. They pulled a stunt on me, that I know what illigal but I dont know what to do about it. I have 16,000 credit limit.
    My bill was 11700, they sent me a letter they were lowering me to 11000. Lowered me below what I had already spent. So it triggered Over the limit” spent and triggered my credit.

  4. MrCoffeecup says:

    Can anyone explain how to determine whether or not one qualifies for rebates, credits, cash back for these errors?
    Do we need to go back through all of the monthly statements to determine errors, bogus charges??

    Do you have an address where one can write or call to determine eligibility?

  5. Andrew says:

    Due to some dishonesty in my family it was necessary for my wife & I to file for bankruptcy 10 years ag. We worked diligently to straitened out our credit problems & now we are back on top.HOWEVER!!! We decided we would only have 2/3 credit cards when we were allowed we have been for several years & have been very,very careful to a point that our credit numbers are now at 790-820 very good & wwe are pleased( and moot helping family members) HOWEVER again & the big point here.
    American xpress sent us offer after offer after offer,finally we said okay we will apply again at which point they said ” that iff we paid off the old debt that was listed in the bankruptcy they would let us have an account.
    While they may or may not be entitled to say seems somewhat illegal & certainly dishonest given the fact they would have written the debt off!!

  6. Andrew says:

    Is it possible to buy US postage stamps at a reduced price anywhere legally & if so where.

    Thank Andrew

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