American Express Chairman, Board Sued for Card Practices
American Express Co.’s (AXP) directors were sued by a shareholder over practices that led to a $112.5 million settlement of claims that it violated consumer safeguards.
The investor, Bob Lankford, who said he has held shares of New York-based American Express since 1996, yesterday sued Chairman Kenneth Chenault and other directors in state Supreme Court in Manhattan.
Lankford asked for unspecified damages and a court order telling the company “to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and to protect the company and its shareholders from a repeat of the damaging events.”
The company’s “illicit card practices” since 2003 included charging illegal late fees, misleading customers on debt collection and discriminating against new applicants based on their age, according to the complaint.
The company, the biggest credit-card issuer by purchases, agreed last month to refund about $85 million to customers and pay civil penalties totaling $27.5 million to four federal regulators to settle the claims.
American Express had no comment on the suit, a spokesman, Mike O’Neill, said in a telephone interview.
Units of American Express deceived customers who signed up for a particular card, leading them to believe they would get $300 and bonus points, according to a statement from the Consumer Financial Protection Bureau announcing the settlement.
The company also failed to report consumer disputes to credit-reporting companies, regulators said.
The settlement involves state regulators from Utah, where American Express owns banks, and four federal agencies, according to statements from CFPB and the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp.
American Express neither admitted nor denied regulators’ accusations in the settlement.
The case is Lankford v. Chenault, 653852/2012, New York State Supreme Court, New York County (Manhattan).
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