Amex Faces Lawsuit In Australia Over Card Distribution Regulations

Australia’s securities watchdog is taking American Express to court because it says the company gave out credit cards without making sure customers knew how to use them.

The Australian Securities and Investments Commission (ASIC) is suing AmEx Australia over two credit cards that both companies, David Jones and AmEx, put their names on.

ASIC says that AmEx knew that some customers were not sure if they had applied for a credit card or just a loyalty card. The suit says that AmEx should have stopped giving out the cards, but didn’t until July.

Also, the company knew that people who applied for credit cards in David Jones stores were much more likely to cancel them than people who applied for credit cards online.

ASIC Deputy chair Sarah Court says: “The design and distribution obligations embed a consumer-centric approach for the issuers and distributors of financial products.

“Product providers must monitor and review whether consumers are receiving products consistent with their needs and cannot bring a ‘set-and-forget mindset’ to product governance. It is critical that providers respond to poor outcomes they identify by making changes.”

“Declarations and pecuniary penalties” are what ASIC wants.