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CFPB: AmEx to pay $75.7M

By Janna Herron ·
Tuesday, December 24, 2013
Posted: 12 pm ET

The Consumer Financial Protection Bureau, or CFPB, ordered American Express to refund $59.5 million to more than 335,000 consumers and pay $16.2 million in fines for illegal credit card practices.

The federal consumer watchdog said Tuesday that the credit card issuer engaged in unfair billing practices and deceptively marketed its credit-monitoring service and payment protection, which suspends part of monthly payments for consumers experiencing a hardship. It said the practices occurred from 2000 through last year.

Among the charges, the company and its third-party vendors did not make clear the benefits of the payment protection plan, length of coverage or the fees for the service. The terms and conditions of its "Lost Wallet" program -- which helps consumers cancel accounts if their wallet is lost or stolen -- wasn't marketed in a uniform way to AmEx's customers in Puerto Rico.

Additionally, the credit card issuer billed consumers for credit-monitoring services that they did not sign up for. As a result, AmEx unfairly charged fees and interest when the unauthorized service was billed to their account and exceeded their credit limit. Last, American Express failed to notify consumers that they are entitled to a free credit report from each credit bureau every 12 months under federal law.

The CFPB is fining American Express $9.6 million. The Federal Deposit Insurance Corp. is fining AmEx $3.6 million, and the Office of the Comptroller of the Currency is fining $3 million.

American Express also has been ordered to refund affected consumers, end these practices, submit to an independent review, review its other credit card add-on products and improve its oversight of its third-party vendors.

American Express has not immediately responded to request for comment. In a press statement, the credit card issuer noted that it has discontinued marketing these services and that it continues to perform internal reviews to correct any questionable practices.

This isn't the first time that American Express got caught in the CFPB's crosshairs. Last year, the credit card issuer was ordered to pay $112.5 million in refunds and penalties for a slew of other shady credit card practice between 2003 and 2012. That action included $85 million in refunds to 250,000 consumers.

The CFPB also last year handed down other restitution orders and penalties against Discover and Capital One.

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