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December 27, 2013

CFPB orders American Express to pay $59.5M

CFPB on Friday ordered American Express to pay consumers $59.5 million in recompense for allegedly unfair billing tactics and deceptive marketing regarding credit card add-on products.

The payout will benefit more than 335,000 consumers. CFPB said three American Express subsidiaries had been using deceptive marketing for add-on products such as payment protection and credit monitoring from 2000 through 2012. American Express was also accused of charging consumers for credit monitoring services without receiving authorization to do so and, in some cases, without even providing the services the consumers were unknowingly charged for.

The bureau coordinated with FDIC and the Office of the Comptroller of the Currency, which have fined subsidiaries American Express Centurion Bank and American Express Bank $3.6 million and $3 million, respectively.

The unfair and illegal practices American Express was charged with include:

  • charging consumers for interest and fees (including fees for services not received) which caused them to exceed account limits, resulting in more fees;
  • disregarding the federal requirement to inform consumers about their right to a free credit report; and
  • misleading consumers about the benefits, fees and time period of payment protection products.

CFPB said American Express and its subsidiaries have signed an agreement to stop deceptive marketing practices, cease billing customers for services they do not receive, increase oversight of third-party vendors, submit to an independent review and pay a $9.8 million fine to the bureau's Civil Penalty Fund.

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