In another demonstration of aggressive enforcement, the CFPB, on October 1, announced that it had settled its enforcement actions against various American Express entities alleging a wide range of compliance violations.  

The settlement requires American Express Bank, FSB and American Express Centurion Bank to make restitution payments totaling $85 million.  In addition, the banks, their holding company, and its parent company are required to pay a total of $27.5 million in civil monetary penalties to the CFPB, the Office of the Comptroller of the Currency, the Federal Reserve Board and the Federal Deposit Insurance Corporation. We have prepared a legal alert on the settlement that details the violations that the American Express entities were alleged to have committed and the relief required by the consent orders. 

The settlement leads us to a few observations.  The scope of the violations alleged by the CFPB in the enforcement actions, ranging from marketing-related violations to collection-related violations, signals the thoroughness with which companies should expect their operations to be reviewed by CFPB examiners. Also, the relative speed with which the settlement was reached once the CFPB became involved demonstrates the vast resources available to the CFPB and the pressure those resources can bring to bear on a CFPB target once an enforcement action is underway.  Finally, the sizable dollar amounts the settlement requires the American Express companies to pay shows the CFPB’s intention to attach significant costs to non-compliance. 

While the consent orders clearly identify the statutory and regulatory provisions at issue, they are short on details about the specific practices that allegedly gave rise to the violations.  We can only conclude that this was intentional and that the CFPB wants consumer financial services providers to review all of their practices related to these statutory and regulatory provisions.  Accordingly, we have been actively assisting our clients in doing so, to be sure that they are not engaged in any practices that the CFPB might find objectionable.