Kevin McCoy, USA Today
Several American Express subsidiaries will refund at least $59.5
million to more than 335,000 consumers for illegal credit card
practices, federal regulators said Tuesday.
The affiliates also
agreed to pay $16.2 million in fines under the settlements announced by
the Consumer Financial Protection Bureau, Federal Deposit Insurance
Corporation and the Office of Comptroller of the Currency.
refunds and penalties relate to add-on products such as credit
monitoring and payment protection that the company and its subsidiaries
offered and sold to cardholders.
"Everyone should be on notice of this issue," CFPB Director Richard Cordray said in announcing
settlements over the deceptive conduct. "Today we are refunding
thousands of American Express customers who were harmed by these illegal
The enforcement action is the fourth the
two-and-a-half year old consumer agency has imposed with other federal
regulators for violations involving credit card add-on products.
Express spokeswoman Marina Norville said the subsidiaries have
discontinued the programs involved in the violations, which she said
company officials self-corrected while negotiating the settlements. Most
customers affected have already received refunds, the company said.
"We want the same thing the regulators want: To be completely honest, fair and transparent with our customers," said Norville.
said deceptive marketing violations began in 2000 and continued through
2012. They involved such programs as Account Protector, an add-on
offering that led some consumers to believe their minimum monthly
payment would be cancelled if they experienced financial hardship due to
unemployment, disability or other major life event.
benefit payment was limited to 2.5% of a consumer's outstanding balance,
up to $500. In many cases, that amount was less than the minimum
payment due, regulators said. Consumers were falsely led to believe the
protection would last up to 24 months. And they were told there would be
no fee if the account balance was paid in full each month - but weren't
told the balance had to be paid before their regular payment due date.
American Express subidiaries used telemarketing sales calls in Spanish
to market a "Lost Wallet" protection program to Puerto Rico consumers.
But the marketing sales scripts varied, and material sent to the
consumers was written in English. As a result, the consumers weren't
adequately alerted to the steps needed to receive full benefits.
also said the American Express subsidiaries engaged in unfair billing
and other illegal practices involving the company's identity protection
add-on products. These offerings included a service to monitor
cardholders' credit information. and require written authorization from
But consumers were immediately charged add-on fees even
before they submitted the necessary authorization, regulators said. An
estimated 85% of the customers who enrolled paid the full fee, sometimes
for several years, without receiving all of the promised benefits.