American Express has decided to refund $85 million to customers and pay $27.5 million in fines to the Consumer Financial Protection Bureau and many other government organizations. The company was sued for wrongdoing that ran afoul of consumer financial laws and is the 3rd charge card company to be sued by the fledgling CFPB.
Card businesses dealing with CFPB
The primary goal of the CFPB is to protect customers from financial services, but that does not just consist of creating brand new legislation. In fact, a bunch of financial service providers are dealing with lawsuits for breaking regulations associated with other organizations.
Charge card corporations have thus far been first in the firing line. Lawsuits involving the CFPB have been brought against Discover and Capital One, according to NBC News, both resulting in settlements in excess of $200 million, much of going to refunding consumers.
Another lawsuit was just recently settled with American Express too, according to CBS. However, the lawsuit did not just include the CFPB. There were also complains from the Federal Reserve, regulators in Utah State, the Federal Deposit Insurance Business, and the Office of the Comptroller of Currency.
$85 million returning to consumers
There were a lot of regulations broken by American Express, including discrimination of those over the age of 35, charging late fees over legal limits, violating regulations for debt collection and reporting, not reporting billing disputes as mandated by law and making false claims about rewards.
American Express decided to refund $85 million to consumers and pay $27.5 million in fines.
Subsidiaries American Express Bank and American Express Centurian Bank were in trouble because they charged a rate higher than legal limits for late fees, according to CNN. Rather than charging one fee, they charge a percentage, according to CBS. Also, $300 bonuses were offered to customers who got the American Express "Blue Sky" car, but customers did not obtain that ever.
American Express Centurian Bank also instituted a credit scoring system based on age, which is contrary to anti-discrimination regulations.
Old debt procedures also cited
Some customers were guaranteed that they would have an increased credit score if they paid off debts older than 7 years, which do not impact credit scores at all. CBS explained that his has occurred since 2003 and still occurred this year. The lies were being told at American Express, American Express Bank and American Express Centurian bank.
According to NBC News, 250,000 people will get part of the $85 million in concessions. This will take place in March 2013.
Card businesses dealing with CFPB
The primary goal of the CFPB is to protect customers from financial services, but that does not just consist of creating brand new legislation. In fact, a bunch of financial service providers are dealing with lawsuits for breaking regulations associated with other organizations.
Charge card corporations have thus far been first in the firing line. Lawsuits involving the CFPB have been brought against Discover and Capital One, according to NBC News, both resulting in settlements in excess of $200 million, much of going to refunding consumers.
Another lawsuit was just recently settled with American Express too, according to CBS. However, the lawsuit did not just include the CFPB. There were also complains from the Federal Reserve, regulators in Utah State, the Federal Deposit Insurance Business, and the Office of the Comptroller of Currency.
$85 million returning to consumers
There were a lot of regulations broken by American Express, including discrimination of those over the age of 35, charging late fees over legal limits, violating regulations for debt collection and reporting, not reporting billing disputes as mandated by law and making false claims about rewards.
American Express decided to refund $85 million to consumers and pay $27.5 million in fines.
Subsidiaries American Express Bank and American Express Centurian Bank were in trouble because they charged a rate higher than legal limits for late fees, according to CNN. Rather than charging one fee, they charge a percentage, according to CBS. Also, $300 bonuses were offered to customers who got the American Express "Blue Sky" car, but customers did not obtain that ever.
American Express Centurian Bank also instituted a credit scoring system based on age, which is contrary to anti-discrimination regulations.
Old debt procedures also cited
Some customers were guaranteed that they would have an increased credit score if they paid off debts older than 7 years, which do not impact credit scores at all. CBS explained that his has occurred since 2003 and still occurred this year. The lies were being told at American Express, American Express Bank and American Express Centurian bank.
According to NBC News, 250,000 people will get part of the $85 million in concessions. This will take place in March 2013.
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