WASHINGTON (Reuters) - American Express (AXP.N) will end up paying $96 million to credit card customers in Puerto Rico and other U.S. territories for charging higher interest rates and engaging in other discriminatory practices, federal regulators said on Wednesday.
The U.S. Consumer Financial Protection Bureau announced that more than 200,000 consumers at two of the company’s banking subsidiaries had been harmed by the practices, which also included stricter credit cutoffs and less debt forgiveness than offered to customers in U.S. states.
American Express said in a statement the discrepancy was discovered in an internal review and reported to the CFPB in 2013. The company voluntarily agreed to provide $95 million in compensation to affected customers, but said it “absolutely does not” agree with the CFPB’s contention that it had discriminated against clients.
“Having long since taken actions that the CFPB subsequently ratified, the company decided to settle with them rather than go through years of litigation that would have provided no additional value to any of its customers,” American Express said.
The CFPB ordered the company to pay an additional $1 million on top of the $95 million and establish new guidelines to ensure the terms of its card offerings were not discriminatory in the future.
The agency added that the company had not intentionally discriminated against customers, but rather the discrepancy occurred due to different business units overseeing cards in U.S. territories as opposed to U.S. states.
“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,” CFPB Director Richard Cordray said in the statement.
Reporting by Pete Schroeder; Editing by Paul Simao