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A class action lawsuit filed against American Express in a U.S. District Court in Florida has been settled for $75 million.

Hundreds of thousands of consumers were reportedly affected by the company’s actions, which involved allegedly failing to disclose additional fees charged when a U.S. purchaser used their account for a purchase denominated in foreign currencies. As part of the settlement, American Express admitted no wrongdoing or fault although the company has reportedly changed its disclosure notices

Media sources claim that legal fees could account for more than $10 million of the settlement. Projections are that most consumers who filed as part of the class will receive a $15 settlement.

As of the holiday break, there was no announcement on when settlements would be disbursed to class members.

Posted under Finance

Visa and American Express have announced their intention to stop working with CardSystem Solutions, the data processor under fire for its announcement last month that 40 million credit card records had been hacked from its databases.

John Perry, CardSystems’ President and CEO, sounded a warning when he announced the impending defection of two of the company’s largest customers. “If Visa and American Express do not reconsider, the effect of their decision on thousands of our merchants is likely to be significant and could disrupt the operation of their payment card system,” Perry said in a statement. “Many of those merchants will need to find a new payment processor, obtain new software, and retrain their employees on a new software system.”

MasterCard, meanwhile, has required that Cardystems submit a detailed data security compliance plan by August 31, 2005.

Posted under Finance, Privacy

Consumers should applaud Walgreen Co.’s decision this week to continue accepting American Express cards at its more than 4,600 stores.

The company had previously stated that it would not accept the cards beginning this month even though Amex had not raised the company’s rates in more than 8 years. Consumer Help Web’s review of the American Express Gold Card is highly favorable, with one negative regarding global acceptance of the card. Conventional wisdom holds that merchants don’t like American Express’ higher “merchant fees” — the percentage that is charged to the merchant on each transaction involving a credit or charge card. Visa and MasterCard both traditionally charge lower merchant fees than American Express.

The company’s annual charge to consumers who carry the card was dismissed by our Bottom Line that said, “..this card makes sense for consumers looking for convenience.” We also noted that virtually every major merchant accepts American Express, a statement that Walgreen’s almost made obsolete.

Walgreen’s about-face on this issue means more choice for consumers, and choice is always good. “Consumers who use and pay off a charge card each month like American Express avoid interest fees,” said Joan Bounacos, president of Consumer Help Web. “You ultimately have the convenience of not having to carry money or write a check, while avoiding interest that can be assessed if you don’t pay your credit card fast. Choice is always good. Choice without cost to the consumer is even better.”

Posted under Customer Service