For this edition of the Official Merchant Services Blog, we take a look at yet another case of troubling consumer card practices. Last week, we covered the news that Discover had been hit with a $200 million dollar fine by the U.S. Government for deceptive practices. Just today, American Express entered into a settlement with Bank Regulators, involving the company’s missteps in U.S. card practices.
American Express reached a settlement with several regulatory agencies to resolve previously disclosed card practices problems involving several of the company’s subsidiaries. The Federal Deposit Insurance Corporation (FDIC), Consumer Financial Protection Bureau (CFPB), Board of Governors of the Federal Reserve System (FRB), Office of Comptroller of the Currency (OCC), and Utah Department of Financial Institutions (UDFI) all agreed upon the settlements with AmEx.
The regulators cited violations including those relating to certain aspects of debt collection practices, credit card solicitations, late fee charges, the reporting of disputes to credit bureaus and new account approval processes. Reportedly, American Express has cooperated fully with the FDIC, CFPB, FRB, OCC, and UDFI. The company is strengthening its internal compliance processes and will continue to work closely with its regulators.
The settlement includes plans for developing a remediation process for each of the cited violations and an agreement to pay fines totaling $27.5 million. In accordance with the settlement, the company will establish funds totaling $85 million for customer refunds through its subsidiaries. The majority of those refunds are related to debt collection practices and late fee charges. Impacted customers will be notified as soon as possible.
Some of the subsidiaries involved include American Express Centurion Bank; American Express Bank, FSB; and American Express Travel Related Services Company, Inc.
If you are an AmEx customer, be on the lookout for any notifications that may imply you are entitled to a refund. We will keep an eye on this story, as well as any other settlements for malicious card practices involving major U.S. Credit Card companies that may arise.
