The recent Target credit card scandal has colored last-minute Christmas shopping with fear — fear of security breaches and lackluster controls and privacy. No doubt, American Express should add to that fear. The federal government today slapped American Express – officially the company’s American Express Centurion Bank — with more than $40 million of fines as a result of the card company’s “unfair and deceptive practices.” What exactly did Amex do? Essentially, it preyed on consumers’ security fears. The three programs that caused Amex’s run-in with the Federal Deposit Insurance Corp and Consumer Financial Protection Bureau were its “Account Protector” insurance-like program; its identity theft program; and its “Lost Wallet” program, also an insurance-like service. All three products sell to consumers’ fear of loss or security breach. In each case, Amex deceived consumers about the products’ coverage and/or services. For example, in the case of the “Account Protector” program, here’s how the FDIC described what Amex did: Consumers were led to believe that the benefits would continue for up to 24 months in the event of a qualifying life event, when in fact the majority of events had benefit periods of one, two, or three months. Consumers were also led to [...]
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