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American Express To Pay Consumers Back Millions

Posted By melissa On 10/11/2012 @ 12:09 pm In Banking | 7 Comments

Do 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?

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