A recent credit card company settlement may benefit Stockton residents with heavy credit card debt. American Express is set to refund approximately 250,000 customers a sum of $85 million to compensate for multiple violations of relevant consumer laws. According to the Consumer Financial Protection Bureau, the company’s violations took place from the moment a customer inquired about a card to the moment when a customer was charged fees for overdue debt.
The credit card giant’s infractions include charging unfair late penalties, misleading people about the Blue Sky credit card program and lying to consumers about the benefits of paying old credit card debt.
As part of the settlement, American Express has promised to end its unseemly practices and refund money directly to its customers by the middle of March. If a customer is still with American Express, he or she will receive a credit on the account. Customers who no longer hold an account with American Express will receive a check in the mail.
Half of this settlement will compensate consumers who paid late fees based on a percentage of the debt they already owed. Applying this kind of late fee is illegal.
Thirty percent of the money will be refunded to consumers who were coerced into thinking that repaying old debt would improve their credit scores or that certain debts would be forgiven if they paid a settlement. The remainder of the payout will go to customers who were mistreated under the Blue Sky program.
American Express is not the only credit card company that has taken advantage of consumers facing financial challenges, whether it be through creditor harassment or misleading statements.
Consumers dealing with companies that violate the law can take action against them by consulting with a debt relief attorney. For consumers with high amounts of credit card debt and no way to pay, bankruptcy can stop all collection activities, regardless of whether they are legal.
Source: Los Angeles Times, “American Express to refund $85 million to credit card customers,” Jim Puzzanghera, Oct. 1, 2012