American Express & Walmart Launch Bluebird: Alternative to Debit & Checking Accounts

۩ ۩ ۩

American Express and Walmart Launch Bluebird®: a New Alternative to Debit and Checking Accounts

Bluebird addresses the need for an affordable, transparent way to manage everyday finances, with premium features, no minimum balance, monthly, or overdraft fees

BENTONVILLE, Ark.--(BUSINESS WIRE)--Oct. 8, 2012-- Walmart and American Express today announced the launch of Bluebird, an alternative to debit and checking accounts designed to help consumers better manage and control their everyday finances. Bluebird has been developed for the tens of millions of Americans who are looking for advanced capabilities such as deposits by smartphone and mobile bill pay, fee transparency, and no minimum balance, monthly, annual or overdraft fees. Bluebird puts the power back in the hands of consumers and will be available next week online at www.bluebird.com and in more than 4,000 Walmart stores.

Building on a pilot program launched in late 2011, Bluebird was shaped by feedback from consumers who said they were not getting the value they expect from traditional checking account and debit services because of increasingly higher fees. According to an independent study by Bretton Woods 1, consumers now pay an average of $259 per year for a basic checking account and that cost is rising due to higher minimum balance requirements and a growing list of fees being added to these services.

"Our customers tell us that they're tired of navigating a complex maze of dos and don'ts to avoid the ever growing list of fees found on checking products. Bluebird solves this problem and we believe it's the best product on the market to help customers affordably manage their everyday finances," said Daniel Eckert, vice president of financial services for Walmart U.S. "At Walmart, we are always looking for ways to make a difference by using the strengths that come with our size, scale and reach to take on the challenges that matter most to our customers. Reducing the costs and frustration that come with high fees is one of these issues."

"The financial services landscape is changing. Technological advances, regulatory changes, and evolving consumer needs are redefining payments ranging from prepaid, to checking and debit. Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products. It allows them to easily and safely move, manage, and spend their money. In an era where it is increasingly "expensive to be poor," we have worked with Walmart to create a financial services product that rights many of the wrongs that plague the market today," said Dan Schulman, group president, Enterprise Growth, American Express.

Read more

۩ ۩ ۩

FDIC Penalizes American Express Centurion Bank for Deceptive Debt Collection Practices and Credit Card Marketing

۩ ۩ ۩

FDIC Announces Settlement With American Express Centurion Bank for Unfair and Deceptive Practices in Debt Collection and Credit Card Marketing

(FDIC; October 1, 2012)

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
=>  Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
=>  Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
=>  Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.

In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

In agreeing to the issuance of the Order, the Bank neither admits nor denies any liability

۩ ۩ ۩

Federal Reserve Penalizes American Express for Deceptive Debt Collection Practices

۩ ۩ ۩

Federal Reserve Board Issues Consent Order and Order of Assessment of a Civil Monetary Penalty

(FRB; October 1, 2012)

The Federal Reserve Board on Monday announced a formal enforcement action, including a $9 million civil money penalty, against American Express Company (Amex) and American Express Travel Related Services Company, Inc. (TRS) to address deceptive marketing and debt collection practices and associated deficiencies in compliance risk management and internal audit. Amex and TRS are both registered bank holding companies based in New York.

TRS provides debt collection and marketing services to its subsidiary banks, American Express Centurion Bank (AECB) and American Express Bank, FSB (AEFSB), and also services its own credit card portfolio. In providing those services, TRS allegedly led customers to believe that their defaulted debt would be "waived" or "forgiven" by acting on a settlement offer without also disclosing the effect that settling for less than the full debt would have on the customers' future credit opportunities. TRS also allegedly made deceptive representations in credit card solicitations concerning the benefits customers would receive by acting on the offer. The Federal Reserve also found that deficiencies in compliance risk management and internal audit, which are firm-wide functions at Amex, allegedly allowed these practices to occur.

The Board's action was taken in coordination with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Utah Department of Financial Institutions. Each agency is announcing formal enforcement actions against entities in the American Express organization that they supervise, which include AECB and AEFSB. TRS's credit card customers affected by the allegedly deceptive practices will be compensated according to the CFPB's enforcement action against TRS.

In addition to the $9 million civil money penalty, the Board's enforcement action requires Amex and TRS to improve consumer compliance oversight and compliance risk-management and internal audit programs.

۩ ۩ ۩

OCC Penalizes American Express for Deceptive Debt Collection Practices

۩ ۩ ۩

OCC Assesses Civil Money Penalty Against American Express, Orders $6 Million in Restitution

(OCC; October 1, 2012)

WASHINGTON - The Office of the Comptroller of the Currency (OCC) today announced a $500,000 civil money penalty against American Express Bank, FSB, for violations of section 5 of the Federal Trade Commission Act and ordered the bank to provide approximately $6 million in restitution to an estimated 17,000 affected customers.

The OCC also ordered the bank to establish an effective vendor management program to oversee the provision of products to the bank’s customers.

The OCC based its penalty on the bank’s failure to properly manage vendors who engaged in deceptive debt collection practices in violation of the statute. The estimated $6 million in restitution will be paid to compensate consumers for the injury suffered as the result of these violations.

The OCC is taking these actions in coordination with separate actions by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), and Federal Deposit Insurance Corporation against American Express companies under their jurisdictions. In addition to the penalty assessed by the OCC against American Express Bank, FSB, the CFPB is assessing a $1.2 million penalty which covers both violations of the Truth in Lending Act, for which the bureau has exclusive enforcement authority, and the deceptive debt collection practices addressed by the OCC penalty and order.

Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical payment obligations required by the CFPB. The civil money penalties assessed by the OCC are payable to the U.S. Treasury.

۩ ۩ ۩