American Express to Pay $112.5 Million in Settlement With Regulators

Bloomberg BusinessWeek
October 1, 2012
Dougherty, Carter; Hamilton, Jesse

American Express will pay $112.5 million to settle claims it violated consumer safeguards from marketing to collections in products sold to about 250,000 customers. Units of American Express allegedly deceived customers who signed up for the Blue Sky card, leading them to believe they would receive $300 plus bonus points, according to a statement from Consumer Financial Protection Bureau director Richard Cordray. Regulators also said the firm imposed illegal late fees, discriminated against some older applicants, led borrowers to believe they were repaying old debts, and failed to report consumer disputes to credit reporting companies, among other wrongdoing. The settlement involves state regulators from Utah, where American Express owns banks, and four federal agencies: the CFPB, the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corp. Under the agreement, the company will refund about $85 million to customers and pay $27.5 million total in civil penalties to the four federal regulators, with $14.1 million of that amount going to the CFPB.
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