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Table of Contents

Lead Story

Thriving in a disruptive market - MLS strategies


Industry Update

Zaxby's breach under investigation

UBPS acquisitions further ambitious vision

AmEx restructuring, reimbursements force job cuts

Fed assesses Durbin effect on networks, banks


SMEs and important changes to the EU data protection act

Bill Farmer
Mako Networks Ltd.

Research Rundown

Fed analysis of post-Durbin effects on networks

Website mistakes to avoid

Selling Prepaid

Prepaid in brief

Using KYC to boost prepaid usage

Low fees may be lynchpin for tax refund card adoption


Is prepaid usage a valid measure of banking status?

Patti Murphy
ProScribes Inc.

Top five reasons to sell POS systems

Brian Jones

Is m-commerce at a cultural tipping point?

Rick Berry
ABC Mobile Pay Inc.


Street SmartsSM:
Tack like a sailor to strengthen your sales

Jeff Fortney
Clearent LLC

Time to take inventory of your leadership stock

Dale S. Laszig
Castles Technology Co. Ltd.

Distancing your ISO from the pack through partnerships

Christopher Briller and Sean O'Neil
MerchantPro Express LLC

Fraudsters persisting in the new year

Nicholas Cucci
Network Merchants Inc.

Company Profile

Glazer_Kennedy Insiders Circle LLC

New Products

Say yes to global customers

Multicurrency processing
Pivotal Payments

Artificial intelligence pinpoints fraud

Kount AI platform
Kount Inc.


You think you've got it bad


GS 10 Years Ago

Readers Speak

Resource Guide



2013 events calendar

A Bigger Thing

The Green Sheet Online Edition

January 28, 2013  •  Issue 13:01:02

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AmEx restructuring, reimbursements force job cuts

American Express Co. reported its 2012 fourth quarter net income was negatively impacted by restructuring charges, reward redemption enhancements and the cost of consumer reimbursement following the company's October 2012 consent agreement with several U.S. regulatory agencies. The company additionally said it is eliminating 5,400 jobs, mostly in its Global Business Travel division, and it is reducing overall 2013 staffing levels 4 to 6 percent below the current 63,500 positions.

Fourth quarter results

AmEx reported a fourth quarter adjusted net income of $1.2 billion which matched the adjusted fourth quarter net income of the same period the previous year. Total revenues were up 5 percent from the previous year to $8.1 billion and card member spending was up 8 percent over the previous year. Final full year and fourth quarter results will be released Jan. 17, 2013.

"In addition to strengthening our ties to merchants and cardmembers, we have launched products for new customer segments, expanded into new geographies internationally, and extended our presence well beyond the traditional American Express footprint," Kenneth Chenault, AmEx Chairman and Chief Executive Officer, said.

Reimbursement costs

The company recently discovered that, over several years' time, late fees of approximately $28 million were collected from cardmembers who did not receive proper notice of the transgression; members were charged interest of approximately $24 million on disputed balances; and it failed to credit $68 million in reward bonuses to cardholders.

The consent agreements the company signed with the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Utah Department of Financial Institutions require reimbursements to said customers of approximately $153 million, the company reported.

"We never want to make mistakes, but we are fully committed to correcting them and providing compensation when appropriate," Chenault explained. "The material costs for reimbursement that we are able to identify have been recognized, but we are going to continue to work closely with regulators and strengthen our controls."

The company also identified more cardmembers who are eligible for a part of the restitution it was ordered to pay under the consent orders. The restitution will reimburse AmEx customers for regulatory violations in the company's debt collection practices, credit card solicitations, late fee charges, reporting of disputes to credit bureaus and new account approval processes.

Under terms of the consent agreements AmEx agreed to pay $27.5 million in fines and establish an $85 million account to pay for customer refunds. The company said the majority of the refunds are related to debt collection and late fee charges.

Job reductions and rewards increase

The job cuts will take place across seniority levels, businesses and staff groups in positions that generally do not directly generate income. The bulk of the layoffs will be in the company's travel business which it believes "is being fundamentally reinvented as a result of the digital revolution."

"Against the backdrop of an uneven economic recovery, these restructuring initiatives are designed to make American Express more nimble, more efficient and more effective in using our resources to drive growth," Chenault noted.

The company is also adding $342 million to its membership rewards reserve to account for an anticipated increase in reward redemptions. "Loyalty and reward programs are one of our major competitive advantages," Chenault said. He noted the success of the rewards program encouraged AmEx to expand it during the last few years to give customers more opportunities to earn and redeem rewards points.

For additional news stories, please visit and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.

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