The Consumer Financial Protection Bureau (“CFPB”) announced on October 1, 2012 that three American Express subsidiaries will refund $85 million to approximately 250,000 customers in connection with illegal credit card practices. An investigation found that at every stage of the consumer experience, from marketing to enrollment to payment to debt collection, American Express systematically violated consumer protection laws. The violations occurred between 2003 and the spring of 2012. The unlawful practices included the following:
In accordance with orders issued on October 1, American Express subsidiaries have agreed to correct their unlawful practices and to issue refunds to consumers who were harmed by the illegal practices. Approximately 250,000 consumers will receive refunds totaling an estimated $85 million. The refunds include the following: (i) consumers who were misled into paying old debt because they thought it would be reported to the credit bureaus will be reimbursed the money they paid plus interest; (ii) consumers promised their debt would be forgiven and who were denied new credit cards because the debt was not forgiven will receive $100 and a pre-approved offer for a new card with terms the CFPB finds acceptable; (iii) Blue Sky customers who were promised $300 for signing up will get that $300; and (iv) consumers who paid an illegal late fee will be reimbursed with interest. In addition to the refunds, the American Express entities will pay a civil penalty of $27.5 million.