OCC Assesses $3 Million Penalty Against American Express Bank, F.S.B; Orders Restitution to Customers for Unfair Billing and Deceptive Marketing Practices

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today assessed a $3 million penalty against American Express Bank, F.S.B., Salt Lake City, Utah, and ordered the bank to make restitution of approximately $4.5 million to thousands of consumers.

The OCC is coordinating its action with the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation, which issued orders today against several American Express companies under their jurisdictions.  In its separate action, the CFPB ordered the bank to pay a $2 million penalty and has ordered restitution for harmed consumers of both the bank and other American Express entities over which the CFPB has jurisdiction. 

The OCC found that the bank’s billing and marketing practices violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1), which prohibits unfair and deceptive acts or practices.  The $3 million civil money penalty reflects a number of factors, including the scope and duration of the violations and financial harm to consumers from the unfair and deceptive practices.  The penalty will be paid to the U.S. Treasury.

Consumers eligible for restitution include those who were (i) unfairly billed for identity theft protection products marketed and sold by the bank and its vendors; and (ii) subjected to the bank’s deceptive marketing practices with regard to a debt cancellation product. 

With regard to unfair billing practices, the restitution ordered by the OCC will benefit consumers who enrolled in and paid for identity theft protection products between October 2009 and July 2012 but did not receive the full benefit of the products.  The restitution will include the full amount paid for these products, plus any associated over-limit fees and finance charges.  The OCC estimates that restitution will involve approximately 26,000 harmed consumers and will total approximately $3.5 million.

With regard to the deceptive marketing practices, the restitution ordered by the OCC will benefit consumers who purchased a debt cancellation product between 2004 and July 2012.  The marketing materials for this product indicated that the product would cancel the consumer’s minimum monthly payment upon the occurrence of certain events when in fact, the product benefits were often insufficient to cover the minimum monthly payment for a significant number of consumers who enrolled in the product and claimed benefits.  The OCC estimates as many as 65,000 harmed customers will receive restitution totaling approximately $1 million. 

The OCC order also requires the bank to improve governance of third-party vendors associated with “add-on” consumer products, develop a risk management program for “add-on” consumer products marketed or sold by the bank or its vendors, and conduct an “add-on” product review to, among other things, identify and remediate consumer harm and any program weaknesses. 

Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical obligations required by the CFPB action.

Related Links

• Consent Order (PDF)
• Consent Order for Civil Money Penalty (PDF)