CFPB and American Express Reach Resolution to Address Discriminatory Card Terms in Puerto Rico and U.S. Territories

The company offered credit and charge card terms that were inferior to those available in the 50 states

CFPB and American Express Reach Resolution to Address Discriminatory Card Terms in Puerto Rico and U.S. Territories
Image: American Express
August 25, 2017

The Consumer Financial Protection Bureau (CFPB) 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.

more than 200,000 consumers harmed

American Express also discriminated against certain consumers with Spanish-language preferences. Over the course of at least ten years, the CFPB says that 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 course of the Bureau's review and American Express' review. The CFPB's order now requires American Express 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."

Centurion Bank and American Express Bank

American Express Centurion Bank and American Express Bank, FSB are both bank subsidiaries of the American Express Company that administer American Express' credit and charge card lines of business. These companies offered 45 credit cards and charge cards, which are similar to credit cards but require the full balance to be paid monthly, in its U.S. states market, including cards such as the American Express Green, Gold, and Platinum card.

In addition to managing cards offered in the 50 U.S. states, American Express Centurion Bank and American Express Bank, FSB also manage cards offered in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories, which include Guam, American Samoa, and Northern Mariana Islands.

Card Differences

Beginning in 2013, the CFPB says that 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 CFPB 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.

Terms of the order

Under the terms of the CFPB order, American Express is required to fully remediate harmed consumers and to not discriminate against residents of Puerto Rico, the U.S. territories, and consumers with a Spanish-language preference.

The CFPB says that it did not assess penalties based on a number of factors, including that American Express self-reported the violations to the Bureau, self-initiated remediation for the harm done to affected consumers, and fully cooperated with the review and investigation.