In New Credit Card Investigation, CFPB Nails American Express for $100 Million

Marking the third major credit card company investigation in just months, the Consumer Financial Protection Bureau today announced it is ordering American Express to refund $85 million to customers who have been harmed by the company’s illegal credit card practices. Federal regulators fined American Express an additional $27.5 million as part of the enforcement action.

The enforcement action was brought by the CFPB in conjunction with the The Federal Deposit Insurance Corporation (FDIC) together with the Utah Department of Financial Institutions. Together, they found the illegal activities during a routine examination of one of American Express’ subsidiaries. The illegal practices the investigators found included every stage of the consumer experience, from marketing, to enrollment, to payment, to debt collection, the CFPB stated.

“Several American Express companies violated consumer protection laws and those laws were violated at all stages of the game – from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt,” said CFPB Director Richard Cordray. “Today’s orders require the American Express companies to fully refund about $85 million to consumers and it requires them to make specific changes in their business practices. The American Express companies will identify the harmed customers, notify them, and make sure they get back their money.”

Specifically, the investigation found consumers were led to believe they would receive bonuses for signing up for certain products; were charged unlawful late fees; were discriminated against on the basis of age; failed to report consumer disputes; and misled consumers about debt collection.

The enforcement action comes following recent enforcement actions against CapitalOne Bank and Discover, both for deceptive marketing practices.

House Democrat Barney Frank (Mass.) commended the action Monday.

“I welcome this latest example of the importance of an independent Consumer Financial Protection Bureau in order to defend the rights of American consumers,” Rep. Frank said in a statement. “I’m particularly pleased that the CFPB is acting here in cooperation between other Federal regulators and with the administration of a state government that can hardly be accused of an anti-free enterprise bias.”

Written by Elizabeth Ecker

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