American Express will pay a penalty of $8 million following a ruling by the Federal Court that the cancelled application rates for the DJs Amex Cards two years ago were a circumstance that would reasonably suggest that the target market determinations for the DJs Amex Cards were no longer appropriate.
American Express admitted four contraventions of the Corporations Act in the period between 25 May 2022 and 5 July 2022.
The contraventions related to two co-branded credit cards (the DJs Amex Card and the DJs Amex Platinum Card), which were primarily distributed to customers in David Jones stores, and also the target market determination for each card.
Most applications for the two DJs co-branded cards were made in store, with most of those applicants enticed by the opportunity for immediate discounts as high as 30 per cent.
As a result, many applicants did not proceed.
Cancellation rates were as high as 60 per cent.
“American Express was also aware that among the reasons for customers opting not to complete the application process or requesting to cancel their card application was that some customers did not understand that they were applying for a credit card with an annual fee” Justice Ian Jackman wrote in his judgement.
American Express admitted that, in the period from 25 May 2022 to 5 July 2022, it contravened the Act “by failing to cease issuing each of the DJs Cards; and by failing to take all reasonable steps to ensure that David Jones was informed that it must not continue distributing each of the DJs Cards.”