Several federal investigators including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) alleged that American Express and its subsidiaries violated consumer protection laws between 2003 and 2012.
The credit card company allegedly charged unlawful late fees, discriminated against new applicants on the basis of age, failed to report consumer disputes to consumer reporting agencies and misled consumers about debt collection.
Consumers who were led to believe they would receive $300 under the "Blue Sky" Credit Card program also did not receive the money, the CFPB alleged."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 in a statement on Monday. "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." Under the terms of the settlement, American Express will pay $300 to all customers who were promised the money for signing up for the Blue Sky Credit Card. Consumers who paid illegal late fees will be reimbursed with interest. Consumers who were promised their debt would be forgiven but were denied new cards because their debt was not forgiven will be given a pre-approved card and $100. Read more about the enforcement action here. Amex will also pay fines to the tune of $14 million to the CFPB, $9 million to the Federal Reserve , $3.9 million to the FDIC and $500,000 to the OCC. -- Written by Shanthi Bharatwaj in New York.