Bloomberg News

AmEx Faces U.S. Enforcement Action on Credit-Card Late Fees

February 24, 2012

American Express Co. (AXP), the biggest credit-card issuer by purchases, faces enforcement actions by the Federal Deposit Insurance Corp. and Consumer Financial Protection Bureau over late fees charged to some customers.

The two U.S. agencies and Utah’s Department of Financial Institutions are reviewing practices of the lender’s Centurion Bank unit over how late fees are assessed, New York-based AmEx said today in its annual regulatory filing. The FDIC told Centurion this month that it plans formal enforcement action, and the CFPB and Utah probably will act as well, AmEx said.

The outcome may involve further changes in Centurion’s practices and “include civil money penalties and require additional refund obligations,” AmEx said. The costs “could adversely affect the company’s operations and results.”

The probe is part of what AmEx called “increasingly complex and robust” regulation following the 2008 financial crisis. Congress singled out the credit-card industry with new curbs on interest rates and fees, and efforts to enforce the rules have intensified, AmEx said.

Elsewhere in the filing, AmEx said losses tied to legal matters and government examinations could range from zero to $510 million.

Jen Howard, a CFPB spokeswoman, and the FDIC’s Greg Hernandez declined to comment.

Last month, Discover Financial Services (DFS), the sixth-biggest U.S. credit-card issuer by customer spending, said a probe by the two federal agencies into the lender’s marketing practices may hurt net income.

American Express climbed 1.3 percent to $53.33 in New York trading. The shares have gained 22 percent in the past year.

To contact the reporter on this story: Peter Eichenbaum in New York at

To contact the editor responsible for this story: David Scheer at

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