Illegal Marketing Practices Cost American Express $85... - Legal News


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » Illegal Marketing Practices Cost American Express $85 Million

Illegal Marketing Practices Cost American Express $85 Million

Illegal Marketing Practices Cost American Express $85 Million
The content is accurate at the time of publication and is subject to change.

This week the Consumer Finance Protection Bureau delivered a blow to American Express, ordering them to refund $85 million to almost 250,000 customers who were charged illegal late fees, promised sign-on bonuses that were never delivered, and who paid off old debts that they were told would be forgiven, but weren’t.

Richard Cordray, director of the Consumer Finance Protection Bureau (CFPB), said in a statement on the CFPB website, “several American Express companies violated consumer protection laws and those laws were violated 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. Today’s orders require the American Express companies to fully refund about $85 million to consumers and it requires them to make specific changes in their business practices.”

Late Fees and Forgiven Debts

At issue, in part were late fees charged by American Express which were based on a percentage of the debt that was in violation of the Credit CARD Act (Credit Card Accountability Responsibility and Disclosure Act of 2009). American Express was ordered to refund all such fees, with interest.

Another problem was with debt collection practices – certain customers were promised that if they paid old debts, the repayment would be reported to credit bureaus, or that their debt would be forgiven, so they could be approved for a new credit card. That didn’t happen, and many customers paid off their debts only to be turned down for a new card and find their credit rating ruined.

Under the CFPB order, customers who were denied new cards after promising that debt would be forgiven will receive a pre-approved offer for a new American Express card, plus $100. If they paid the debt already, and got a new card, they will be refunded the amount they paid to get the new card.

A Piece of Blue Sky

If you’ve ever heard the saying, “let’s sell them a piece of blue sky” in reference to swindling customers, you can appreciate the irony surrounding American Express’s Blue Sky credit card. Some customers were promised a $300 bonus for signing up for the card, but never received it. Now American Express has been ordered to pay that $300 reward to everyone who was told they would get it.

The confusion stemmed from a promotion at the end of 2010, which offered customers reward points that were valued at $300, but federal regulators said that American Express misled customers because the wording of the marketing materials made some people believe they would get $300 on top of the reward points. Marina Hoffmann Norville, an AmEx spokesperson, said in a statement that the company “took responsibility for correcting the issues,” and that the majority of the refunds will go toward late fee and debt-collection issues, not disgruntled Blue Sky customers.

Other Violations and How to Get Your Refund

Other problematic practices found by the CFPB took place between 2003 and 2012 – things like unlawful age discrimination against new applicants, which violated the Equal Credit Opportunity Act, and failing to report customer disputes to credit bureaus, a violation of the Fair Credit Reporting Act.

Anyone affected by the ruling and who has a refund coming will be contacted by American Express, who is responsible under the court order to notify all affected customers. The CFPB reminds consumers that anyone contacting customers with offers to help them claim their refund is likely to be a scammer. No action is required for AmEx customers to receive their refunds, if they have them coming.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

CARD Act Saves Consumers Billions in Penalty Fees
CARD Act Saves Consumers Billions in Penalty Fees

Posted: October 17, 2013

Credit card holders could have been charged $2.5 billion more in overlimit fees if the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) had not been signed into law in 2009, according to the Consumer Financial… Continue reading

Credit Card News Highlights of 2012
Credit Card News Highlights of 2012

Posted: December 31, 2012

As 2012 draws to a close, we take a look at some of the headlines in the credit card industry this past year. Continue reading

Customers More Satisfied with Credit Cards than Mortgages
Customers More Satisfied with Credit Cards than Mortgages

Posted: September 17, 2012

A report from the Consumer Financial Protection Bureau about their new consumer-reporting system shows fewer complaints by credit card customers than expected, with more complaints coming in about mortgage companies than credit cards…. Continue reading

Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Introducing the New Citi Rewards+ Card - the only credit card that automatically rounds up to the nearest 10 points on every purchase - with no cap
For Excellent, Good Credit
Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days
For Good/Excellent Credit
See Rates & Fees
Perfect credit not required for approval; we may approve you when others won’t
For Fair/Bad Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!