WASHINGTON: American Express agreed to pay $75.7m to settle claims that it used deceptive marketing practices to sell protection services to credit-card customers.
The company must pay $59.5m in restitution to more than 335,000 harmed customers, according to the deals announced on Tuesday by the Federal Deposit Insurance Corp, Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. The biggest credit-card issuer by customer purchases violated the law when it misrepresented the costs and benefits of its add-on products, the agencies said.
“We first warned companies last year about using deceptive marketing to sell credit card add-on products, and everyone should be on notice of this issue,” Richard Cordray, director of the consumer bureau, said.
The agencies assessed New York-based AmEx $16.2m in penalties for misleading customers from 2000 to 2012 and also billing them for services they never received, according to the regulators’ orders. The deal also requires the company to fix its practices, including its relationships with third-party vendors.
AmEx said that it has already paid most of the restitution and stopped marketing the products in the settlements more than a year ago. “American Express has cooperated fully with the CFPB, FDIC and OCC,” the company said and added that it “continues to conduct internal reviews designed to identify issues, correct them and ensure that its products and practices meet a high standard of quality.”
Regulators had penalised the company last year for other violations related to credit-card add-on products in a deal that totaled $112.5m. In that settlement, the firm was accused of deceiving customers who signed up for certain cards, leading them to believe they would receive benefits they didn’t.
WP-Bloomberg
