by Christopher Freeburn | October 2, 2012 11:12 am
American Express (NYSE:AXP) said on Monday that it will return $85 million to customers and pay $27.5 million in fines as part of a settlement with regulators over improper billing, promotional and collection activities.
The settlement, which affects about 250,000 American Express customers, comes after a number of federal agencies, including the Federal Reserve, Office of Comptroller of the Currency and the Consumer Financial Protection Bureau, uncovered several infringements of consumer protection regulations dating back to 2003, The New York Times noted.
Refunds will be paid to customers by March 2013.
Regulators accused American Express of making misleading promotions to attract customers, including promised rewards that were never paid. The government said the credit card issuer induced consumers to make payments on old credit debts by promising to improve their credit scores, when in fact, it never reported the payments to credit-reporting bureaus.
The company also allegedly discriminated against some customer due to their age.
Among the subsidiaries of American Express targeted by regulators were Centurion Bank, American Express Bank and American Express Travel Related Services.
American Express officials indicated that the company would establish an independent consumer protection compliance audit and implement processes to mitigate future violations. It also promised to continue cooperating with the government.
Shares of American Express slipped fractionally in Tuesday morning trading.
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