American Express paying over $112M in refunds, fines - New York News

American Express paying over $112M in refunds, fines

Posted: Updated:

WASHINGTON (AP) -- American Express is paying $112.5 million in refunds and fines to settle regulators' accusations that it charged unlawful late fees and deceived customers to pressure them to pay off old debts or buy extra credit card services.

The company agreed to the settlements announced Monday by four federal agencies, including the Federal Reserve and the Consumer Financial Protection Bureau, and Utah regulators.

American Express is refunding $85 million to about 250,000 customers and is paying $27.5 million in civil fines.

The agencies said American Express violated federal laws prohibiting deceptive practices by using false statements to get customers to settle old debts. The regulators say that included falsely telling customers that if they agreed to settlements to partially pay off their debts, the remaining balance would be forgiven.

The violations were said to have occurred from 2003 to this past spring.

The director of the Consumer Financial Protection Bureau, Richard Cordray, said in a statement that the company violated consumer-protection laws "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."

American Express also charged late fees on some credit cards based on a percentage of the debt owed, a violation of a 2009 law prohibiting certain credit card practices, the regulators said.

They said customers were sometimes led to believe they would get $300 as well as bonus points if they signed up for Amex's "Blue Sky" credit card program. Customers who met the conditions didn't receive the promised $300, according to the agencies.

In addition, they said the company:

--Unlawfully discriminated against consumers applying for new card accounts on the basis of age.

--Failed to report customer disputes over billing to the consumer-credit reporting agencies.

New York-based American Express also agreed to end the practices and to hire independent auditors to ensure the company's compliance with consumer-protection laws.

The company said most of the $85 million in refunds is related to late fees and debt collection practices. Customers entitled to refunds will be notified as soon as possible, it said.

Amex also said in a statement that it has put together plans to correct each of the violations cited by the regulators. "The company is strengthening its internal compliance processes and will continue to work closely with its regulators," the statement said.

Amex also noted that it has previously set aside reserves to cover a large part of the refunds and fines.

Also reaching settlements with the company were the Federal Deposit Insurance Corp. and the U.S. Office of the Comptroller of the Currency, a Treasury Department agency that regulates national banks.

Federal regulators are examining the sale of add-on credit card products in the financial industry overall.

The alleged violations by Amex were discovered during a routine examination of the company's bank subsidiary by the FDIC and the Utah banking agency, the regulators said Monday. Parts of the investigation then were transferred to the Consumer Financial Protection Bureau.

That agency, which began operations last year, was created by the 2010 financial overhaul law to protect consumers from excessive or hidden fees and other financial threats. Its settlement with Amex is its fourth public enforcement action. Last week, the consumer bureau and the FDIC announced an agreement by Discover Bank to pay millions in fees to resolve accusations that it pressured credit card customers to buy costly add-on services like payment protection and credit monitoring.

  • Your MoneyMore>>

  • OKCupid, Facebook not alone in studying consumers

    OKCupid, Facebook not alone in studying consumers

    Tuesday, July 29 2014 4:51 PM EDT2014-07-29 20:51:44 GMT
    Think you're in control? Think again. This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company's revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users' moods.
    Think you're in control? Think again. This week, OKCupid became the latest company to admit that it has manipulated customer data to see how users of its dating service would react to one another. The New York-based Internet company's revelation follows news earlier this month that Facebook let researchers change news feeds to see how it would affect users' moods.
  • New York's microbrew industry growing

    New York's microbrew industry growing

    Monday, July 28 2014 8:39 PM EDT2014-07-29 00:39:52 GMT
    Local and small beer brewing companies have something to toast. The Brewers Association says microbrew sales grew in the first half of this year; up 18 percent over the same period last year. This comes at a time when overall domestic beer consumption is flat.Ethan Long, one of the owners of the Rockaway Brewing Company in Long Island City, started brewing beer two years ago.
    Local and small beer brewing companies have something to toast. The Brewers Association says microbrew sales grew in the first half of this year; up 18 percent over the same period last year. This comes at a time when overall domestic beer consumption is flat.Ethan Long, one of the owners of the Rockaway Brewing Company in Long Island City, started brewing beer two years ago.
  • Maryland casino to interview workers from closing Atlantic City casinos

    Md. casino eyes workers from closing Atlantic City casinos

    Friday, July 25 2014 4:32 PM EDT2014-07-25 20:32:23 GMT
    AP photoAP photo
    A Maryland casino is looking to hire some of the soon-to-be-jobless Atlantic City casino workers. Maryland Live! is holding job fairs next week at the Sheraton hotel across from the Atlantic City Convention Center. The Hanover, Maryland casino held a similar recruitment effort in January when The Atlantic Club shut down.
    A Maryland casino is looking to hire some of the soon-to-be-jobless Atlantic City casino workers. Maryland Live! is holding job fairs next week at the Sheraton hotel across from the Atlantic City Convention Center. The Hanover, Maryland casino held a similar recruitment effort in January when The Atlantic Club shut down.
  • Local NewsLocal NewsMore>>

  • Andy Golub's NYC Bodypainting Day

    Andy Golub's NYC Bodypainting Day

    Wednesday, July 30 2014 10:43 PM EDT2014-07-31 02:43:52 GMT
    The saying art is autobiographical takes on a whole new meaning when your canvas is a fully nude human body, as it is for artist Andy Golub. Andy along with 30 other artists and 45 Technicolor models paraded around several Manhattan hotspots over the weekend for NYC Body Painting day. Believe or not, this is completely legal in New York City.
    The saying art is autobiographical takes on a whole new meaning when your canvas is a fully nude human body, as it is for artist Andy Golub. Andy along with 30 other artists and 45 Technicolor models paraded around several Manhattan hotspots over the weekend for NYC Body Painting day. Believe or not, this is completely legal in New York City.
  • Protestors rally against NYPD's 'broken windows' policing

    Protestors rally against NYPD's 'broken windows' policing

    Wednesday, July 30 2014 10:07 PM EDT2014-07-31 02:07:39 GMT
    Emotions about police brutality were still raw at a protest in Harlem Wednesday night. Eric Garner died after police put him in an apparent choke hold. Cops stopped garner for the minor offense of selling loose cigarettes in Staten Island. Officers had been enforcing the so-called broken windows policy.
    Emotions about police brutality were still raw at a protest in Harlem Wednesday night. Eric Garner died after police put him in an apparent choke hold. Cops stopped garner for the minor offense of selling loose cigarettes in Staten Island. Officers had been enforcing the so-called broken windows policy.
  • Fatal skydiving accident on Long Island

    Fatal skydiving accident on Long Island

    Wednesday, July 30 2014 9:13 PM EDT2014-07-31 01:13:49 GMT
    Police on Long Island say one person has died and another has been seriously injured in a skydiving accident. Riverhead police say it happened at about 4 p.m. Wednesday at Skydive Long Island in Calverton. Police say the injured person was airlifted to Stony Brook University Hospital in critical condition.
    Police on Long Island say one person has died and another has been seriously injured in a skydiving accident. Riverhead police say it happened at about 4 p.m. Wednesday at Skydive Long Island in Calverton. Police say the injured person was airlifted to Stony Brook University Hospital in critical condition.
Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices