Four years ago, the Consumer Financial Protection Bureau told companies it would look fondly on industry players that police themselves, promptly make harmed consumers whole and self-report any potential violations to the agency.
Those activities—detailed in a June 2013 bulletin titled “Responsible Business Conduct: Self-Policing, Self-Reporting, Remediation, and Cooperation”—were factors the CFPB said it “may favorably consider in exercising its enforcement discretion.”
On Wednesday, American Express became the latest company to benefit from the CFPB’s sympathy for self-reporters.
Citing the company’s decision to self-report disparities in its credit offerings, the CFPB declined to impose a civil penalty in a settlement with two American Express subsidiaries over allegations they discriminated against consumers in Puerto Rico and other U.S. territories by offering credit card terms inferior to those available in the 50 states.
The American Express subsidiaries, according to the CFPB, also discriminated against consumers with Spanish-language preferences by not extending them debt collection offers that were available to consumers who did not indicate a similar preference in the states.
“American Express discriminated against consumers in Puerto Rico and the U.S. territories by providing them with less-favorable financial products and services. They have ceased this practice and are making consumers whole,” CFPB Director Richard Cordray said in a prepared statement. “In particular, because they self-reported the problem and fully cooperated with our investigation, no civil penalties are being assessed in this matter.”
More than 200,000 consumers suffered from the company’s discriminatory practices, which included charging higher interest rates and providing less debt forgiveness, the CFPB said. American Express has returned about $95 million to harmed consumers in the course of its internal review and the CFPB’s review, according to the settlement agreement, which requires the company to pay an additional $1 million in redress.
In the six-year history of the CFPB, it’s been rare for a company to self-report misconduct and evade otherwise more tough enforcement.
The CFPB in 2014 declined to assess civil penalties against GE Capital Retail Bank—now known as Synchrony Bank—in a settlement over allegedly discriminatory credit practices. The bank was, however, ordered to pay $169 million to borrowers who were allegedly excluded from debt relief offers because they listed addresses in Puerto Rico or said they preferred to communicate in Spanish. In the same settlement, the bank was ordered to refund credit card consumers $56 million and pay a $3.5 million penalty over deceptive advertising allegations.
The CFPB said it declined to assess a penalty over the alleged discrimination because the bank “self-reported the violation, self-initiated remediation for the harm done to affected consumers, and fully cooperated with the bureau’s investigation.”