Rob Sandall's Blog

The massive credit card company American Express has been fined 112 million dollars to settle accusations from regulators that it was charging its customers with unlawful and unethical late fees and deceived them into paying off debts unnecessarily and buying new lines of credit without being obligated to do so.

These fines for unethical proceedings were imposed upon the company following an enquiry from numerous regulatory forces, including the Consumer Financial Protection Bureau and the Federal Reserve.  The company is being forced to pay around 85 million dollars to approximately 250000 customers, and 27 million in civil fines. The enquirers discovered that the company had been cheating customers from 2003 onwards to this spring. One of the deceptive scams used frequently by AmEx was to falsely tell customers that if they paid off a portion of their debt immediately, the remainder of their debt would be forgiven, as well as charging late fees on some credit cards based on a percentage of their debt, a practice outlawed by a 2009 law prohibiting some unfair credit card practices.

This case is a clear violation of Business Ethics as the company was earning a great deal of money by taking advantage of vulnerable customers who don’t know any better. This is yet another case of companies choosing to business the wrong way until they are caught and fined by regulatory forces. It showcases that if there weren’t regulatory forces such as the Federal Reserve there would be nothing keeping businesses to go about in an ethical manner other than their own conscience, which we have seen is a rare commodity in the corporate world.

Ethics is something that is taught in EVERY business school, so why do these things continue to happen? There are many cases to back up a train of thought that states that people simply do not care about doing the right thing, or just prefer to look the other way. Perhaps it will just be a problem that will always be present in the corporate world, and consumers, regulators, and other businesses will have to be aware of these issues, and strive to correct them.

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