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American Express Fined for Convenience Check Changes (Update1)


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By Peter Eichenbaum and Linda Shen

June 30 (Bloomberg) — American Express Co., the biggest U.S. credit-card company by purchases, agreed to pay $500,000 in fines and $3.5 million in refunds after causing customers to incur penalties on convenience checks.

The Office of Thrift Supervision and the Federal Deposit Insurance Corp. fined two subsidiaries of New York-based American Express $250,000 each, the agencies said today in separate statements.

The regulators said American Express sent out convenience checks that consumers could use to tap their credit-card accounts, then lowered their credit limits and didn’t honor some of the checks, triggering penalties for the customers.

American Express will pay the refunds without admitting wrongdoing, according to a regulatory filing today. The lender said its banks “agreed to modify certain practices of their convenience-check programs and disclosures and to assist qualifying card members in the removal of their respective names from any ‘bad check’ registry or similar database.”

The company has 29 days to pay eligible customers $160 for each declined convenience check and must establish a process for customers to submit claims for reimbursement of fees and charges incurred beyond that amount, the OTS said.

The FDIC said American Express Centurion Bank agreed to pay a civil money penalty. With its affiliated thrift institution, the bank agreed to reimburse more than 14,000 convenience check users for possible bounced check fees, the FDIC said.

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This entry was posted on Tuesday, June 30th, 2009, 8:25 pm and is filed under Business. You can follow any responses to this entry through RSS 2.0. You can leave a response, or trackback from your own site.

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