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Living with credit, Protecting yourself

$3,000 mystery: AmEx sends big refund, little explanation

Fred Williams

Beth was surprised when she got a big check from American Express. The check for more than $3,000 gave back the premiums she had paid into the company’s “credit protection” program for years and years.

“The letter didn’t explain a lot,” the Florida resident said. “I called AmEx … when I told them how much the check was for, they went, ‘huh?’ ”

In 2013 American Express agreed to refund $59.5 million in credit protection premiums as part of a settlement with the U.S. Consumer Financial Protection Bureau. Actually, the company said the refund checks had already been sent by the time the settlement was announced.

Credit protection is a kind of insurance policy for your credit card. Also called payment protection, it generally covers your monthly payment if you lose your job.

As part of the settlement, AmEx agreed to review accounts not covered in the agreement itself, and see if any of them deserved refunds. That review appears to be the reason for the delayed refund that Beth received. It’s not certain because the letter that came with the check didn’t say much.

“It was cagey, almost,” said Beth, who didn’t want her full name published because of the sensitivity of her financial information. AmEx representatives did not respond to a request for comment.

She had to go online to find out that the federal consumer bureau played a role in her refund. The letter just said it was a return of her premiums, and apologized for the delay.

Beth was perhaps one of the program’s most loyal adherents. Or one of its biggest victims. “We’re talking about an account I had for more than 20 years,” she said. She canceled the card about 2012.

Beth enrolled in payment protection because jobs in her field — public relations — are notoriously uncertain. She knew it would be tough to shoulder the balance on her Gold Card without a paycheck coming in.

The protection cost as much as $75 a month, depending on her balance. But the last time she was unemployed and put in a claim, the coverage seemed skimpy. It took care of the minimum payment for a while, but interest still built up. The balance continued to hang over her.

While the refund is welcome, it should come with a little more information. There was no indication that the check Beth received was the result of flaws in the payment protection program. Limits on benefits meant the program paid out relatively little of the premium money that consumers paid in. AmEx paid regulators $16.2 million in fines as part of the 2013 settlement.

Now the consumer bureau is battling critics who want to reduce its power. To defend itself it is trumpeting its achievements, such as the refunds paid to consumers in settlements like the one with AmEx. Companies have refunded $11.2 billion to consumers because of its enforcement actions since it opened in 2011, the consumer bureau trumpets on its newly redesigned website.

Instead of singing their own praises, it would be better if the CFPB required companies to explain the reasons for refunds when they mail out checks. Otherwise, consumers are still in the dark.

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