The Consumer Financial Protection Bureau has ordered American Express to pay more than $75 million to settle claims that it charged improper fees and misled its credit card customers over so-called add-on products like identity fraud protection.
American Express will have to refund $59.5 million to more than 335,000 consumers over what the bureau called “illegal credit card practices.” American Express will also have to pay a $9.6 million cash penalty to the bureau, according to a statement issued.
The settlement is the latest government enforcement action aimed at cracking down on credit card companies, which have come under tougher scrutiny as federal regulators have sought tighter restrictions on hidden fees and penalties.
The bureau said one problematic product involved American Express’s “account protector,” which was marketed as a way for customers to wipe out their minimum monthly payment if they lost their job or had a disability.
But the bureau said that in reality, the benefit payment was limited to 2.5 percent of the consumer’s outstanding balance, up to $500. In many cases, the amount that was canceled was less than the minimum payment due. The bureau also says American Express unfairly charged interest and fees, some of which caused customers to exceed their credit limits, resulting in additional fees.
American Express said it had taken steps to rectify the problems. It will also issue refunds to customers who were affected by the settlement or checks to consumers who no longer hold accounts with the company.