Posts Tagged ‘American Express’

Articles

AMEX….Refund of $85 Million…..

In Accounting & Finances,Business,Culture on October 15, 2012 by Sufen Wang Tagged: , , , , , , ,

American Express Owes Its Customers Big-Time: $85 Million

American Express: the self-proclaimed world’s largest credit card issuer, the gold standard, the blue chip of credit card providers– well, not anymore. At least, not since the company got caught red-handed using a wide variety of “deceptive consumer practices.” The silver lining is that if you’re one of those consumers, you can expect a refund sometime before March 15th of next year.

That’s because the Consumer Financial Protection Bureau has ordered the credit card company to refund $85 million to 250,000 duped customers, along with paying $27.5 million in civil fines. For example, many applicants for AmEx’s “Blue Sky” credit card program were promised $300 – except all signs of the bonus disappeared into thin air once they signed up. Any victims of this scam will receive a check for their long-lost $300.

Did you know that it’s a violation of the Credit CARD Act to bill late fees on credit cards based on a percentage of the debt? American Express knew that, but did it anyways. Accordingly, any affected customers will have these illegal late fees refunded, with interest.

AmEx also persuaded some customers that they could improve their credit scores by paying off their old credit card debts – except they conveniently forgot to explain that the debts were so old, they really didn’t even need to be paid off. Oh, and then AmEx conveniently forgot to report the payments to the credit bureaus. These customers will be reimbursed the old debt settlement money, with interest.

AmEx’s bamboozling doesn’t stop there, as CFPB Director Richard Cordbray made clear when he stated that the violations took place “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.” The credit card company even used a credit scoring system that discriminated against applicants based on age.

Eligible, affected customers who are still with AmEx (after reading this, you might be switching companies soon) will have their accounts credited, while anyone who has since left will receive a refund check in the mail by the above date. The fines will hardly make a dent in AmEx’s pocket, considering its $30 billion revenue last year, but hopefully these charges will discredit the credit card giant for awhile.

On the Money, Sufen Wang, Wang Solutions