The recent American Express bust is the latest example of the kind of protections consumers wouldn’t get if Republicans had their way with the Consumer Financial Protection Bureau (CFPB) and federal regulations that empower the agency to watchdog-protect consumers from the kind of financial abuse that helped instigate the Great Recession and continue today.
It’s also a testament to the CFPB’s resolve to enforce regulations it was charged administer.
The CFPB and other federal agencies recently ordered American Express to compensate 250,000 card-carrying members $85 million for illegal practices and American Express has agreed to the order.
“Over the course of a long, multi-agency investigation, we found that at every stage of the consumer experience − from advertising to enrollment to payment to collection – these American Express subsidiaries had violated various consumer financial laws,” said Richard Cordray, CFPB director.
CFPB investigations found that when consumers were shopping for credit cards, one American Express company sent potential customers misleading credit card offerings in the mail.
When consumers applied for cards, the same company engaged in practices that unlawfully discriminated on the basis of age. In connection with consumers paying their bills, American Express companies violated consumer financial laws, including charging excessive late fees.
CFPB also found that all three American Express subsidiaries − American Express Centurion Bank and American Express Bank, FSB, along with their parent company and affiliate, American Express Travel Related Services Company, Inc. – misled people into paying off old debt by telling them that it would be reported to the credit bureaus and their credit scores would improve.
What really happened was the debt was not reported to the credit bureaus and was so old that it may not have appeared in credit reports anyway.
That’s pretty slimy.
CFPB said American Express will return the money directly into the accounts of the affected consumers. If the consumer no longer holds the American Express card, American Express will mail a check or credit any outstanding balance.
- Customers who were promised $300 for signing up for a Blue Sky Credit Card will get the $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.
Consumers are not required to take any action to receive their credit or check, CFPB says.
If you are one of the consumers affected by the order, American Express will notify you directly, says CFPB. American Express is responsible for notifying any affected consumers – any other entity that offers to help reclaim your money is likely just as much a scam.
Either way, don’t be fooled.
Don’t be fooled by scam artists, including financial institutions that say they will correct wrongs.
History proves, even billions of dollars in restititutions is only a small cost of doing business for major financial institutions.
To them it’s just chump change.
And we are the chumps.
Also see: “Consumers expect, and deserve, that companies follow the rules” by Richard Cordray, director, CFPB.