American Express to settle fraud charges on debt collection, credit card marketingComtex News Network
WASHINGTON, Oct 01, 2012 (Xinhua via COMTEX) -- American Express Centurion Bank,a leading U.S. credit card firm, will pay 112.5 million U.S.dollars to settle fraud charges for unfair and deceptive practicesin debt collection and credit card marketing, the U.S. regulatorsannounced Monday.
The regulators, including the Federal Reserve, the FederalDeposit Insurance Corporation and the consumer FinancialProtection Bureau, claimed that American Express violated federallaws prohibiting deceptive practices by using false statements tomake customers settle old debts during a period from 2003 to thispast spring.
American Express also charged late fees on some credit cardsbased on a percentage of the debt owed, which violated a 2009 lawprohibiting certain credit card practices, according to theregulators.
In addition, the company was charged for unlawfuldiscrimination against consumers applying for new card accounts onthe basis of age and failure to report customer disputes overbilling to the consumer-credit reporting agencies.
To settle these charges, American Express reached a settlementwith the regulators, agreeing to refund 85 million dollars to theaffected 250,000 customers and pay 27.5 million dollars in civilfines.
However, the alleged charges did not affect American Expressshares, which climbed to near 57.8 dollars in afternoon tradingMonday.
It was the latest legal action by U.S. regulators against giantbanks' unlawful moves, as the federal regulators are examining thesale of add-on credit card products in the financial industry.