This is a great article. If you are an American Express cardholder, you should definitely read this article.
American Express to Pay $85M to 250K Consumers
By LaToya Irby, About.com Guide
The Consumer Financial Protection Bureau means business. After ordering Capital One to refund $140 million to consumers and Discover to refund $200 million, the CFPB has ordered American Express subsidiaries to refund $85 million to approximately 250,000 consumers.
American Express is considered to be one of the most prestigious credit card issuers. While their settlement involves lower dollar amounts and fewer consumers, the charges seem a lot more severe.
The Bureau decided American Express did several things wrong over the span of several years.
American Express subsidiaries promised a $300 reward to some consumers who signed up for the American Express Blue Sky credit card. However, the bank failed to give the $300 bonus. The CFPB requires this bonus to be paid to eligible cardholders.
In some cases, consumers were charged a late fee above the legal maximum of $25 ($35 if late two times in six-month period). CFPB is requiring American Express to reimburse the late fees plus interest.
They also violated the Equal Credit Opportunity Act by using age as a factor in a credit scoring system but failing to apply the system to applicants over age 35.
American Express subsidiaries led some consumers to believe they could improve their credit by paying old debts when the accounts were actually beyond the credit reporting time limit, which is seven years for most kinds of debt. Your credit score isn't influenced by paying debts that are no longer being reported. The CFPB now requires American Express to notify consumers when they're collecting a debt that is too old to be reported to a credit bureau.
Some consumers were told they could accept a settlement offer and have their debt forgiven. However, the debts were not actually forgiven and consumers were later denied an American Express card because of it. To these consumers, American Express has to pay $100 and send a pre-approved credit card offer. Consumers who already paid a settlement to receive a credit card will receive a refund of that debt paid plus interest.
American Express will also have to pay $27.5 in penalty fees to the CFPB, the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency.
If you are eligible for a refund, you don't have to do anything. The refund will be made automatically as a credit to your existing American Express account or a check mailed to you.
From the time you miss your first credit card payment, you trigger a series of actions that could be hard to stop. If you think you're having a hard time making your payments now, wait until you're three or four months past due. It might be impossible to catch up then.
Here's what you can expect to happen When You Stop Making Credit Card Payments. As you read through the list, you won't see anything good and it might be worse than you expected.
If you foresee trouble making your credit card payments, explore your options before your due date passes. Once you're past due, some options disappear. For example, you won't qualify for a low interest rate balance transfer once a late payment shows up on your credit report.
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