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American Express facing up to $510 million in losses from inaccurate card late fees

American Express said in a Feb. 24 filing with the Securities and Exchange Commission that the company faces enforcement actions from regulators over inaccurate late fees charged to credit card customers.

American Express said in the filing that it is “reasonably possible” that the losses resulting from the regulatory enforcement actions and legal filings could cost up to $510 million, according to American Banker.

The Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions have been reviewing American Express’s Centurion Bank and its card practices, particularly how the late fees are determined. The company said in the filing that the FDIC has given “relevant” information to the Consumer Financial Protection Bureau.

Earlier this month, the FDIC informed American Express of its intent to take “formal enforcement action” against the bank, “and it appears likely that the CFPB,” along with the Utah Department of Financial Institutions, “will take some type of action against” the bank as well, the filing said, American Banker reports. The filing also said that those actions could possibly include civil fines.

American Express offers several credit card services, including a hybrid card that allows customers to carry a balance on a charge card, whereas normally the balance must be paid in full at the end of the month. A spokesman for American Express said that the company was applying late fees to balances on the cards that customers had scheduled to pay off at the end of the month.

The filing said that the company has established an estimated refund to customers and made changes to certain areas of its card practices and policies. Additional policy changes may be necessary, however, as the penalties incurred may “adversely affect the company’s operations and results,” the filing said, according to American Banker.

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