In an announcement that is likely to have every creditor — especially those in the financial services industry — reaching out to their third-party partners, the Office of the Comptroller of the Currency yesterday announced that American Express National Bank has paid a $15 million fine for not properly governing or overseeing how a third-party affiliate was interacting with the bank’s customers.
A copy of the enforcement action can be accessed by clicking here.
Going back to between 2015 and 2017, American Express had a program aimed at retaining small business customers. The bank employed a third-party affiliate that “strong-armed or misled” small business customers into signing up for credit and charge cards by misrepresenting card rewards and fees or by giving business owners cards that they had not sought, according to a published report.
The bank failed to properly govern and oversee the affiliate’s call monitoring and documentation processes, and how the affiliate tracked and monitored customer complaints. The bank also failed to gather employer identification numbers for certain customers and properly maintain records regarding compliance with the Customer Identification Program regulations. The bank also failed to properly maintain records related to its effort to retain such customers and later produce those records in response to requests from the OCC.
The bank “recklessly engaged in unsafe or unsound practices,” according to the OCC.
The enforcement order was the first one following the release of updated guidance from the OCC to the national banks it regulates instructing them to more carefully monitor the risks they face from relationships with third parties.
In a statement, American Express acknowledged that it had remediated the issues raised by the OCC in the enforcement order.
“American Express will pay a $15 million civil money penalty to the OCC. We had fully reserved for the penalty in a prior period,” the company wrote in an email, according to a published report
