Upheld: Debt collection practices complaint against American Express Services Europe Limited

Decision detail

Summary

Mr M complained that Amex fraudulently extracted money from him through an unexpected £3,400 annual membership fee charged after his account should have been closed. The fee was collected by direct debit, which Mr M challenged through his bank, resulting in a refund but leaving a balance on the account. Amex then reported missed payments to Mr M's credit file and referred the account to collections agencies despite no valid debt existing. The ombudsman upheld the complaint, finding that Amex failed to close the account when Mr M reasonably expected, making the fee charge unfair. Amex was ordered to refund the £3,400, remove the negative credit file entries, and pay £150 compensation for distress and inconvenience.

The Ombudsman's reasoning

The ombudsman found that Amex failed to close the account when Mr M reasonably expected it to be closed, leading to an unfair membership fee charge. The subsequent attempts to collect the fee, reporting of missed payments to the credit file, and referral to collections agencies were all consequences of this initial failure. Amex's acknowledgment that it was unreasonable to expect Mr M to pay the fee in these circumstances supported upholding the complaint. The ombudsman considered Mr M's health challenges and the distress caused by the prolonged resolution process when determining appropriate compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website