American Express Co. on Wednesday acknowledged that it offered worse terms to credit-card customers in Puerto Rico and other U.S. territories than those extended to customers in the 50 states, and has paid $95 million to settle the matter.
The company said it settled allegations by the Consumer Financial Protection Bureau that its actions harmed more than 200,000 customers in U.S. territories between 2005 and 2015 as it charged higher interest rates, offered less attractive rebates and promotional offers and imposed stricter standards for credit-score cutoffs and debt forgiveness.
Continue Reading Below
The credit-card company, which self-reported the practices to the CFPB and has changed the terms it offers, said it disagreed with the regulator's characterization of its practices as discriminatory. Rather, the company said, the discrepancies resulted from a corporate structure that had its international business unit serving customers in Puerto Rico, the U.S. Virgin Islands and the Pacific territories.
"The products in the U.S. territories were very competitive with local offerings, and they were always made available to qualified individuals without regard to race or ethnicity," American Express said. "However, by law, these products should not have varied from their continental U.S. counterparts."
American Express already made $95 million in payments to affected customers between 2013 and 2016. The CFPB ordered American Express to pay at least $1 million on top of the $95 million to cover customers who haven't yet received full compensation.
An American Express spokeswoman said the company reported the payments to investors in July as it announced quarterly earnings, adding there was no material impact on its financial results.
The company said that after becoming aware of the discrepancies, it reported the matter to the CFPB in 2013 and changed the terms and features of these cards to match its mainland products.
Write to Yuka Hayashi at email@example.com
(END) Dow Jones Newswires
August 23, 2017 15:56 ET (19:56 GMT)