American Express receives $75 million dollar fine

The American government is beginning to crack down onĀ credit-card companies for engaging in deceptive and illegal practices.

American Express has just been ordered by the Consumer Financial Protection BureauĀ to pay a total ofĀ 75 million dollars for misleading consumers and carrying out “deceptive” practices between 2003 and spring 2012.

Over 335,000 consumers will be receiving 59.5 million dollars due to what the Bureau is callingĀ ā€œillegal credit-card practices.ā€

A furtherĀ 3.6 million dollars will be paid to the Federal Deposit Insurance Corp. and 3ā€‰million will go to the Office of the Comptroller of the Currency – both agencies helped theĀ Consumer Financial Protection Bureau with their investigation.

In a statement made by theĀ Consumer Financial Protection Bureau on Tuesday, theĀ Consumer Financial Protection BureauĀ Director, Richard Cordray, said:

ā€œSeveral American Express companies violated consumer protection laws and those laws were violated at all stages of the game – from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt”

He added:

“Todayā€™s orders require the American Express companies to fully refund about $85 million to consumers and it requires them to make specific changes in their business practices. The American Express companies will identify the harmed customers, notify them, and make sure they get back their money.ā€

The violations that theĀ Bureau identified included:

  1. Deceiving consumers who joined theĀ credit card program calledĀ “American Express Blue Sky”
  2. Charging unlawful late fees
  3. Misleading consumers about debt collection
  4. Failing to report consumer disputes to consumer reporting agencies

This is not the first time that the Bureau has caught credit companies engaging in illegal and deceptive behavior.

Only a few days ago theĀ BureauĀ cracked down on the auto lending companies Ally Financial Inc. and Ally Bank, making themĀ pay $80 million in damagesĀ for “illegal discrimination against over 235,000 African-American, Hispanic, and Asian and Pacific Islander borrowers.”