American Express has been ordered by federal regulators to pay nearly $76 million to settle allegations that it used to deceptive marketing and unfair billing practices to sell credit card add-on products to its customers.
Amex and its affiliated companies will pay a total of $59.5 million in restitution to customers, along with three separate penalties to federal regulators totaling $16.2 million. The penalties were announced Dec. 24 in separate agreements with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.
From 2000 through 2012, Amex and its subsidiaries, vendors and telemarketers used deceptive practices to sell credit card identity-theft protection and account monitoring services, among other add-ons, the CFPB said. Amex misled its customers about the costs, benefits and fees of these products, and charged customers for the services without authorization, the regulators say.
In addition to the penalties and restitution, Amex agreed to reform its marketing and billing practices, submit to an independent review and improve its oversight of its third-party vendors.
"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," says CFPB Director Richard Cordray in a news release. "Today we are refunding thousands of American Express customers who were harmed by these illegal practices."
This is the second time the CFPB and banking regulators have issued coordinated actions against Amex for problems with its add-on offerings, and the fourth such action the regulator has taken since the agency was established in 2011.
Last year, Amex agreed to pay $112 million to settle a variety of allegations, including illegal debt-collection practices, discrimination and failure to report disputes to credit bureaus.
The CFPB has also fined Discover Financial Services and Capital One for questionable marketing of credit card add-ons.
The orders announced Dec. 24 with Amex encompassed a number of the card company's subsidiaries. The FDIC's action is against American Express Centurion Bank in Salt Lake City, while the OCC's action is against American Express Bank, also in Salt Lake City.