Card corporations dealing with CFPB
The primary goal of the Consumer Financial Protection Bureau is to guard consumers from financial services, but that does not just include making new legislation. In fact, a variety of financial service providers are dealing with suits for breaking regulations associated with other organizations.
Credit card companies have thus far been first in the firing line. Suits involving the Consumer Financial Protection Bureau have been brought against Discover and Capital One, according to NBC News, both resulting in settlements in excess of $200 million, much of going to refunding customers.
American Express has just settled a similar suit, brought by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Business, the Federal Reserve, and, according to CBS, regulators from the state of Utah.
Returned to customers
American Express is in trouble for breaking multiple regulations, including failing to report billing disputes and regulations about debt collection and reporting. It also charged late fees over legal limits and made false claims about rewards. Also, applicants over the age of 35 were discriminated against.
The credit card company is ordered to pay $27.5 million in fines and $85 million back to customers in a refund.
The brouhaha over late charges, according to CBS, was due to charging late fees depending on a percentage but, according to CNN, subsidiaries American Express Centurian Bank and American Express Bank set the rate in excess of already established limits. American Express Centurian Bank also offered $300 to qualified consumers who were approved for an American Express “Blue Sky” card, which some consumers never received.
Age was a huge factor in the credit scoring system at American Express Centurian Bank. That is not legal because it is known as discrimination.
Old debt practices also cited
At American Express and its subsidiaries, there were lies being told from 2003 until now, according to CBS. The lie was that customers could increase their credit scores if they paid off debts older than 7 years. These debts do not even show up on a credit score after that time frame.
In March 2013, about 250,000 people will get part of the $85 million concessions, according to NBC News.