American Express Admits to Offering Worse Credit-Card Terms in U.S. Territories
August 23 2017 - 3:11PM
Dow Jones News
By Yuka Hayashi
WASHINGTON -- American Express Co. on Wednesday acknowledged
that it offered worse terms to credit-card customers in Puerto Rico
and other U.S. territories than those extended to customers in the
50 states, and has paid $95 million to settle the matter.
The company said it settled allegations by the Consumer
Financial Protection Bureau that its actions harmed more than
200,000 customers in U.S. territories between 2005 and 2015 as it
charged higher interest rates, offered less attractive rebates and
promotional offers and imposed stricter standards for credit-score
cutoffs and debt forgiveness.
The credit-card company, which self-reported the practices to
the CFPB and has changed the terms it offers, said it disagreed
with the regulator's characterization of its practices as
discriminatory. Rather, the company said, the discrepancies
resulted from a corporate structure that had its international
business unit serving customers in Puerto Rico, the U.S. Virgin
Islands and the Pacific territories.
"The products in the U.S. territories were very competitive with
local offerings, and they were always made available to qualified
individuals without regard to race or ethnicity," American Express
said. "However, by law, these products should not have varied from
their continental U.S. counterparts."
American Express already made $95 million in payments to
affected customers between 2013 and 2016. The CFPB ordered American
Express to pay at least $1 million on top of the $95 million to
cover customers who haven't yet received full compensation.
An American Express spokeswoman said the company reported the
payments to investors in July as it announced quarterly earnings,
adding there was no material impact on its financial results.
The company said that after becoming aware of the discrepancies,
it reported the matter to the CFPB in 2013 and changed the terms
and features of these cards to match its mainland products.
Write to Yuka Hayashi at yuka.hayashi@wsj.com
(END) Dow Jones Newswires
August 23, 2017 15:56 ET (19:56 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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