In the increasing competition to attract consumers to their credit cards, credit card companies have begun offering a wide array of rewards programs linked to their cards. Some offer airline miles, others offer points that can be redeemed for products such as iPods, and still others offer cash back. The goals for all of these programs are to attract customers and, equally important, encourage them to spend on their credit card. After all, a credit card company cannot make money if people do not spend on their card.
However, a lawsuit filed against American Express alleges that the company failed to give consumers cash rebates promised on its Blue Cash Card. Back in September 2003, the card was marketed with the promise that consumers could earn up to 5 percent cash back on purchases made with the Blue Cash Card. What was not made clear was that there were 2 aspects to this Blue Cash rebate, according to the lawsuit.
The first was that consumers would only earn up to 3 percent cash back for purchases made. The second is that consumers would get a 2 percent bonus for carrying a balance on the card. Furthermore, consumers with a balance of over $6,000 got a lesser percentage for purchases up to $6,000. They only actually got the higher percentage when they were over $6,000 and it was only applied to those new purchases. So, someone who spent $7,000 would only get the higher rebate percentage for the additional $1,000. The initial $6,000 would have the lower interest rate applied.
American Express now faces a lawsuit concerning its marketing of the card, alleging the company intentionally gave false and misleading information regarding the rebate program. The suit has been given the green light to go ahead by the U.S. Court of Appeals for the Third Circuit, who found that consumers could band together in a class action lawsuit to pursue their claim against the company. The suit seeks to represent consumers who had an AmEx Blue Cash Card between September 2003 and December 2005.
What is interesting about this lawsuit is that AmEx tried to have it dismissed on the basis of a clause in the customer contract requiring they go through arbitration to settle claims. However, the court found that, because of the amount of money involved in the individual claims, arbitration would be unreasonable for each person to go through, while a class-action lawsuit would provide a forum for customers to be compensated. This opens the door for other class action lawsuits where a company has included an arbitration clause in its contract.
What it means for AmEx customers with the Blue Cash Card is that they may be eligible to join a class action lawsuit against the company to try to recover rebates they say they were promised but never received.