AmEx Owes $96M To U.S. Territories Customers For Discriminatory Practices

The Consumer Financial Protection Bureau (CFPB) announced Wednesday (Aug. 23) that it has taken action against two American Express banking subsidiaries for discriminating against consumers in Puerto Rico, the U.S. Virgin Islands and other U.S. territories by providing them with credit and charge card terms that were inferior to those available in the U.S.

In a press release, the government watchdog said the credit card company also discriminated against certain consumers with Spanish-language preferences. American Express has paid approximately $95 million in consumer redress during the course of the bureau’s review and American Express’ review, and the order Wednesday requires it to pay at least another $1 million to fully compensate consumers.  “Consumer financial protections are not confined within the 50 states,” said CFPB Director Richard Cordray in a press release announcing the action.. “American Express discriminated against consumers in Puerto Rico and the U.S. territories by providing them with less-favorable financial products and services. They have ceased this practice and are making consumers whole. In particular, because they self-reported the problem and fully cooperated with our investigation, no civil penalties are being assessed in this matter.”

According to the CFPB, over the course of at least 10 years, more than 200,000 consumers were harmed by American Express’ discriminatory practices, which included charging higher interest rates, imposing stricter credit cutoffs and providing less debt forgiveness.  The CFPB said that starting in 2013, American Express self-reported to the bureau differences between its Puerto Rico and U.S. Virgin Islands cards and its cards offered in the 50 U.S. states, as well as differences with respect to certain consumers with a Spanish-language preference. Through the course of a supervisory review, the CFPB said it concluded that, from at least 2005 to 2015, American Express’ Puerto Rico cards had different — and often worse — pricing, rebates, and promotional offers, underwriting, customer and account management services and collections practices than its U.S. cards. The bureau’s review did not find that American Express intentionally discriminated against its customers but rather found that these differences were the result of American Express’ card management structure, which had different business units overseeing its Puerto Rico cards and U.S. cards.