American Express announced Monday that it plans to reimburse $85 million to approximately 250,000 customers, according to the New York Times, for multiple violations. The company will also pay $27.5 million in fines to regulators.
The penalties come as a result of accusations, “that the company violated federal law in its marketing, billing and debt collection practices,” reports the NYT. A Business Insider article detailed how American Express was called out on multiple misbehaviors, including:
- Age discrimination—the system intentionally disregarded applicants older than 35 for a period of time.
- Violated the Credit CARD Act‘s rules on late fees by billing late fees based on a percentage of the debt owed
- Failing to follow through on $300 promised to customers in the Blue Sky credit card program
- Asking customers to overpay debt payments: “Consumers were wrongly told that if they paid off the old debt, the payment would be reported to credit bureaus and could improve their credit scores. In fact, American Express was not reporting the payments and the debts were so old that even if they had tried to report them, many of the payments would not have appeared on these consumers’ credit reports or affected their credit scores.”
Refunds to customers will materialize in March 2013.
What will be the fall out from this? Will American Express users switch to a new credit card company? What’s more, the $112.5 million fine seems rather lax. How much money do you think American Express scammed customers out of or didn’t cough up when it promised to?
With many banking institutions still feeling the heat from the public over the 2008 financial crisis (re: Occupy Wall Street), a credit card company denying customers their rights does not feel like the proper way for citizens to restore their faith in the country’s institutions or business leaders.