American Express to compensate card owners $96 million for engaging in discriminatory practices

American Express has landed itself into trouble by engaging in discriminatory practices that include charging higher rates from its customers, according to federal regulators.

The company will have to pay $96 million to credit card customers in Puerto Rico and other US territories.

In addition to this, the US Consumer Financial Protection Bureau has also ordered American Express to pay $1 million and formulate new guidelines ensuring non-discriminatory card offerings in future.

Add WION as a Preferred Source

The US CFPB announced recently that over 200,000 consumer's at two of the company's banking subsidiaries had been influenced by the practices.The Bureau also said that the company follows stricter credit cutoffs and less debt forgiveness for consumers outside the US states.

American Express clarified that the discrepancy, which was discovered by the organisation itself, had already been reported to the CFPB in 2013. The company also added that it had admitted compensating $95 million to the affected customers.

"Having long since taken actions that the CFPB subsequently ratified, the company decided to settle with them rather than go through years of litigation that would have provided no additional value to any of its customers," American Express said.

Justifying The American Express, CFPB said that the company had not intentionally discriminated against customers. The discrepancy occurred due to different business units overseeing cards in US territories and US states.

"They have ceased this practice and are making consumers whole. In particular, because they self-reported the problem and fully cooperated with our investigation, no civil penalties are being assessed in this matter," CFPB Director Richard Cordray said in the statement.