American Express will follow in the footsteps of Discover Card and Capitol One by refunding cardholders for questionable business practices.
The Consumer Financial Protection Bureau announced that American Express will refund $85 million to 250,000 customers for implementing bogus fees and deceptive debt collection and marketing tactics. The credit card company will also be required to pay $27.5 million to the CFPB, Federal Deposit Insurance Corp, the Federal Reserve, and the Office of the Comptroller of the Currency.
The announcement follows recent similar cases against Discover Card that had to repay customers $214 million, and Capitol One that had to shell out $210 million.
A CFPB investigation revealed that consumer protection law violations had occurred between 2003 and 2012 at American Express Centurion Bank, American Express Bank and American Express Travel Related Services Company.
American Express is required to take the following actions:
- Customers who were promised $300 for signing up for a Blue Sky Credit Card will be paid $300.
- Consumers who paid an illegal late fee will be reimbursed, with interest.
- Consumers who paid old debt in response to deceptive promises to report payment to credit bureaus will be reimbursed the money they paid plus interest.
- Consumers who were promised their debt would be forgiven but were denied new American Express cards because the debt was not really forgiven, will receive $100 and a pre-approved offer for a new card with terms we and the FDIC find acceptable. If the consumer already paid the waived or forgiven amount in order to get a new card, they will be refunded that amount plus interest.
Cardholder accounts will be refunded directly by March 15, 2013, and consumers do not need to contact American Express or take any action to receive their payment. If the consumers are no longer cardholders, they will receive a check by mail. American Express will contact any affected consumers. CFPB also warns consumers to be wary of any third-party that offers to help reclaim the money for consumers.