Terrible acts by American Express lead to them having to pay a settlement with FDIC and CFPB

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:

• Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
• Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
• Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.

In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

Another pro se case under the FCRA

Why is it that so many people think they can adequately represent themselves in Fair Credit Reportin Act litigation? This is by far the most complicated area of law that I have encountered in my ten years of practicing law. And this is the LAST area of law that I would recommend any non-lawyer trying to represent himself or herself.

Here's another case where a consumer represented himself - Pulliam v. American Express Travel Related Services Co., Inc., which was handed down by District Judge Matthew F. Kennelly of the United States District Court for the Northern District of Illinois, Eastern Division.

Representing himself, Pulliam alleged violations of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, as well as common law fraud, breach of contract, and intentional interference with prospective economic advantage. American Express moved to dismiss all the Plaintiff's claims.

Pulliam had an account with American Express. American Express offered to settle the amount owed on the account for less than the full value owed. Plaintiff took American Express on its offer and allegedly paid the settlement amount agreed upon.

The Plaintiff subsequently learned that American Express had a judgment against him. American Express had also reported three charged off accounts to the credit bureaus for inclusion on the Plaintiff's credit reports. The Plaintiff then disputed the American Express judgment and charged off accounts to the credit bureaus, among others. When American Express refused to correct the Plaintiff's credit report, the Plaintiff sued American Express alleging the claims listed above.

The Court correctly held that the facts do support a claim against American Express pursuant to 15 U.S.C. 1681s-2(a) and 15 U.S.C. 1681s-2(b) but also correctly held that there is no private cause of action for a violation of 15 U.S.C. 1681s-2(a). There is a private cause of action for American Express failing to perform a reasonable investigation pursuant to 1681s-2(b). The Court dismissed the Plaintiff's claims brought pursuant to 1681s-2(a) but allowed the Plaintiff's 1681s-2(b) claim to survive. The Plaintiff's 15 U.S.C. 1681b claim for American Express obtaining a copy of his credit report without a permissible purpose also survived because the Court correctly did not buy American Express' argument that the fact that the Plaintiff at one time had an open account with American Express gave American Express the right to pull the Plaintiff's credit report.

Suprisingly, American Express did not argue that the Plaintiff's state law claims were preempted by 15 U.S.C. 1681t(b)(1)(F). However, the Plaintiff's state law claims were dismissed for other grounds.

Overall, a good decision regarding the differences between a claim pursuant to 1681s-2(a) and one brought pursuant to 1681s-2(b).