American Express will have to pay $75.7 million in order to alleviate concerns the credit card company deceived card holders about protection services. The fine was issued by the Consumer Financial Protection Bureau (CFPB).
As part of the fine, American Express will have to pay $59.5 million to more than 335,000 card holders and a $9.6 million penalty to the CFPB.
Not the company's first offense
This is not the first time American Express has gotten into trouble with the CFPB. In 2012, the credit card company paid $85 million to 250,000 customers in reimbursements over violating federal laws in regard to marketing, billing and debt collection.
CFPB closely monitoring credit repair and monitoring products
American Express is not the first credit card company to be investigated for credit monitoring and repair products. In July 2012, Capital One paid $210 million in fines and restitutions dealing with their credit repair and monitoring services. Bloomberg reported Bank of America has been talking with the bureau in order to settle its own allegations about deceiving customers about its products.
CFPB also reached settlements with JPMorgan Chase and Discover Financial Services stemming from their own customer deceptions. Richard Cordray, director of CFPB, said consumers trust these organizations in order to help them repair their credit and they let them down.
"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," Cordray said. "Today we are refunding thousands of American Express customers who were harmed by these illegal practices."
Bloomberg reported CFPB's investigations has targeted the six biggest credit card issuers, which account for 68 percent of the credit card market.
Charging for services customers don't receive
Many of the problems the bureau had issues with dealt with protection and monitoring products. One of these included the account protector product from American Express. This service would help customers deal with their monthly minimum payment if they found themselves in the situation of losing their job or having a disability. The New York Times reported the account protector service did not entirely wipe out a monthly minimum payment, but instead only had card members pay only 2.5 percent of the payment.
Another service CFPB had issues with was the company's identity-fraud protection service. This service would aid customers in combating cybercriminals stealing personal information, thus helping them maintain or repair their credit.
Even though American Express did not have permission to sell these products, they continued to charge fees, even with a majority of its customers enrolling in the service. The bureau reported more than 85 percent of American Express's customers were charged for the services and did not receive them.
Working with the CFPB
Another service that did not work was the company's "Lost Wallet" service. This product would help card holders in Puerto Rico cancel or replace a card in the situation it was lost or stolen. The bureau believed this service was not properly marketed in Spanish, which confused many customers. Officials for American Express released a statement saying it will cooperate and deal with the penalties in a timely manner.
"As previously reported, American Express continues to conduct internal reviews designed to identify issues, correct them and ensure that its products and practices meet a high standard of quality," the statement read.
The settlement will reimburse customers who were card holders from 2000 to 2012. American Express will also be paying $3.6 million to the Federal Deposit Insurance Corporation and $3 million to the Office of the Comptroller of the Currency, who also helped CFPB with the investigation.