WASHINGTON–The Consumer Financial Protection Bureau 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 50 states.
The CFPB said American Express also discriminated against certain consumers with Spanish-language preferences.
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. American Express has paid approximately $95 million in consumer redress during the Bureau’s review and American Express’ review, and today’s order requires it to pay at least another $1 million to fully compensate harmed consumers.
“Consumer financial protections are not confined within the 50 states,” said CFPB Director Richard Cordray. “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.”
American Express Centurion Bank and American Express Bank, FSB are both bank subsidiaries of American Express Company that administer American Express Company’s credit and charge card lines of business.
Beginning in 2013, the CFPB said American Express self-reported to the Bureau differences between its Puerto Rico and U.S. Virgin Islands cards (collectively, Puerto Rico cards) and its cards offered in the 50 U.S. states (U.S. cards), as well as differences with respect to certain consumers with a Spanish-language preference. Through the course of a supervisory review, the Bureau 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.
During the Bureau’s review, American Express provided monetary and non-monetary relief to 221,932 harmed consumers, resulting in approximately $95 million of remediation. American Express must review and verify the adequacy of any redress done prior to the CFPB order. The Bureau is ordering American Express to pay at least an additional $1 million to redress harmed consumers who have not yet been fully compensated, as required by the consent order.