American Express announced Monday that they will pay $112.5 million in refunds and fines to reach settlements with four federal agencies, including the Consumer Financial Protection Bureau and Federal (CFPB) and Federal Deposit Insurance Corporation (FDIC), over illegal practices and regulatory infractions.
Under the terms of the settlement, American Express with pay $27.5 million in civil fines for “deceptive practices,” and will refund $85 million to around a quarter of a million customers.
Among the illegal practices American Express conducted from 2003 to present are improper debt collection practices, credit card solicitations and late fee charges. Customers who signed up for the Blue Sky Credit Card, paid debt in response to deceptive fee presentation or were denied cards after a promise of debt forgiveness are among those who will receive reimbursements.
American Express becomes the third major U.S. financial institution to come under heavy regulatory fines associated with the Dodd-Frank Act and Durbin Amendment. Capital One was forced to pay $210 million in restitutions in late July, while Discover came to a $214 million settlement just last week.
On Monday, PYMNTS spoke with three Market Platform Dynamics experts about the one-year anniversary of the Dodd-Frank Act. During our interview, Brian Smith, an MPD managing director, predicted that within the next week, a third major U.S. financial institution would be hit with major regulatory fines.
According to the release, American Express will reach out to affected customers directly.
Read more about the American Express settlement here.
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