Three subsidiaries of American Express have been ordered to refund about $85 million by the Consumer Financial Protection Bureau (CFPB). These refunds are to go to about a quarter million customers as a result of illegal card practices on the part of three American Express subsidiaries.
Violated all along the way
This refund action came due to a federal investigation that found that American Express was violating consumer protection laws at every part of the customer’s experience. In fact, the article I saw recently said that American Express companies not only violated protection laws for consumers they violated them at every stage along the way. This occurred from the time that consumers shopped for cards to the time he or she received a telephone call regarding really old debt. The orders from the CFPB will require American Express companies to not only refund the $85 million but to also change the way they do business. The three American Express companies are to identify the customers that they harmed and then ensure they get their money back.
What specifically the three companies did
As examples of what these companies did, customers were seriously deceived who applied for the “Blue Sky” card program. They were led to think they would get $300 along with bonus points if they applied for the program from American Express Centurion Bank. However, even consumers who met the required qualifications didn’t get the $300.
And even more
American Express Bank, FSB and American Express Centurion Bank and were found to have charged late fees on specific cards that were based on a percent of what the customers owed, which violates the credit CARD Act.
In addition, American Express Centurion Bank was found to have used a system for credit scoring that treated people differently due to their age. This is a violation of the Equal Credit Opportunity Act. The bank also didn’t report disputes with consumers to the consumer reporting bureaus and deluded consumers about debt collection. The three American Express subsidiaries were found to have deceived customers into thinking that there were good reasons to pay off old debt. What their customers were told was that if they paid off this debt, American Express would report this to the credit bureaus and their credit scores would be improved. However, American Express did not report these payments and in some cases even if the company had reported them, many would never have appeared on customers’ credit reports as they were too old.
Who will get refunds
The American Express companies will have to provide customers with full repayment who were fooled into paying old debts ane who were promised their debt would be excused but they weren’t forgiven. Full repayment will also go to Blue Sky customers who had been promised they would receive $300 for signing up and never got it, and to customers who paid an illegal late fee. If the consumers remain customers they will get a credit to their account. If not, they will get a check.
The American Express companies have also been told they will be required to implement procedures to ensure they are complying with all consumer protection laws. In order to ensure they are complying with these orders, they will be required to use independent auditors.
Customers’ rights
The three American express companies will be required to tell customers when they are trying to collect old debt that it will not be reported to any consumer reporting agency because it is too old. And they will not be allowed to collect debt unless they have documentation that evidences it. Several government agencies have ordered monetary penalties totaling $27.5 million.