Federal regulators have order card company American Express, to pay nearly $76 million in refunds and penalty fees after being accused of illegal practices.
The allegations against American Express are due to deceptive marketing and unlawful charges of fees during the years of 2000-2012. American Express along with its affiliate companies were order to refund the amount of $59.5 million to their cardholders. An additional $16.2 million are to be paid in penalty fees according to agreements with the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corp. and the Office of the Comtroller of the Currency.
The claims against the card company show American Express, with its subsidiaries and affiliates, using deceptive marketing tactics to sell identity-theft protection and card monitoring tools to its customers among other add-ons. The CFBP claims American Express misled their customers on the costs and fees of the services and add-ons and charged them without authorization.
“We first warned companies last year about using deceptive marketing to sell credit card add-on products and everyone should be on notice of this issue. Today we are refunding thousands of American Express customers who were harmed by these illegal practices,” added CFPB Director Richard Cordray in a news release.
UTIP Platform Now Supporting Chinese QuotesGo to article >>
The CFPB has also taken a similar approach with Discover Financial and Capitol One due to suspicious marketing tactics of security features and add-ons.
Amex had come to an agreement with the federal regulators to reform their marketing plan and fee structure. Their new marketing plan and fee structure will be subject to third-party approval.
Image courtesy of Flicker