July 1, 2009
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News: AmEx Pays $500,000 in Fines
American Express (AmEx), one of the nation's largest credit card companies announced the settlement in the dispute over the company's alleged illegal actions pertaining to card convenience checks. AmEx agreed to pay $500,000 in fines and refund nearly $3.5 million that the credit card company had collected when it hit customers with penalties for using the checks. According to the Office of Thrift Supervision and the Federal Deposit Insurance Corp. (FDIC), they slapped two of American Express's subsidiaries, American Express Centurion Bank and American Express Bank, with fines of $250,000 each. Reports indicated that AmEx mailed out thousands of convenience checks to customers connected to their credit cards for use to access funds up to their credit limit. In the meantime, the lender lowered some of the customers' credit limits and did not honor their checks. To make matters worse, AmEx slapped those cardholders with large penalties.
American Express has agreed to credit the penalties placed against the credit card accounts in question and pay the fines; however, declined to admit to any wrongdoing. Additionally, the company agreed to review and modify its credit card convenience check program in order to assist the qualifying cardholders with the removal of their names from any bad check listing and credit reporting database. American Express was given 29 days to refund $160 per incident to each eligible cardholder. The company must also establish a procedure to facilitate customers in submitting claims for reimbursement of penalties that exceeded the $160. According to the FDIC, the Salt Lake City, Utah based American Express Centurion Bank has agreed to reimburse bounced check fees relating to nearly 14,000 convenience check users.
It will be some time before American Express offers the convenience checks to its customers. They will need to find a more viable system that will not raise regulatory concerns. Consumers are once again warned to be cautious when accepting any offer from a credit card company. Careful consideration should be given to all terms and conditions of the offers and any questions should be addressed to the lender prior to accepting. The New York based American Express is traded on the New York Stock Exchange (NYSE) under the symbol AXP and experienced an 11 cents gain following the announcement.