By Jeff Bater
American Express settled with the Consumer Financial Protection Bureau for at least $96 million to address allegations two bank subsidiaries discriminated against credit card holders in U.S. territories, the regulator announced Aug. 23.
The CFPB accused American Express Centurion Bank and American Express Bank of providing consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories with credit and charge card terms that were inferior to those available elsewhere in the U.S.
American Express has paid about $95 million to consumers during the course of reviews by the CFPB and the company, the regulator said. The CFPB consent order announced Aug. 23 requires the company to pay at least another $1 million to fully compensate harmed consumers.
“Over the course of at least 10 years, more than 200,000 consumers were harmed by American Express’ discriminatory practices, which included charging higher interest rates, imposing stricter credit cutoffs, and providing less debt forgiveness,” the bureau said.
American Express said it “absolutely does not agree” with the CFPB’s discrimination claims. “Having long since taken actions that the CFPB subsequently ratified, the company decided to settle with them rather than go through years of litigation that would have provided no additional value to any of its customers,” the company said in a statement.
American Express said the discrepancy in card terms was discovered during an internal review that began in 2012. The company said it reported the matter to the CFPB in 2013 and changed the terms and features of cards offered in U.S. overseas territories to match its products elsewhere in the U.S.
The CFPB said its own review concluded that from at least 2005 to 2015, American Express’ Puerto Rico cards “had different — and often worse — pricing, rebates, and promotional offers, underwriting, customer and account management services, and collections practices than its U.S. cards.”
The bureau added that its review “did not find that American Express intentionally discriminated against its customers but rather found that these differences were the result of American Express’ card management structure, which had different business units overseeing its Puerto Rico cards and U.S. cards.”
Richard Cordray, the CFPB’s director, said American Express has ceased the practice and that because of its cooperation in the matter, no civil penalties were assessed.
To contact the reporter on this story: Jeff Bater in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)