American Express Australia to pay $8M penalty for DDO breaches
The Federal Court has ordered American Express Australia Limited (Amex) to pay $8 million in penalties for breaching the design and distribution obligations (DDO) in relation to two co-branded credit cards which were primarily distributed to customers in David Jones stores.
The Court found Amex breached the design and distribution obligations as a credit card issuer from 25 May 2022 to 5 July 2022, because Amex:
- ought to have known high cancelled application rates reasonably suggested that the target market determinations (TMDs) for the cards were no longer appropriate; and
- failed to stop issuing the credit cards when it had not reviewed the TMDs.
ASIC was unsuccessful in its allegation Amex contravened s994C(5) of the Corporations Act by failing to take all reasonable steps to ensure David Jones was informed it must not continue distributing the credit cards instore.
Amex admitted the contraventions and jointly submitted the penalties sought by ASIC were appropriate.
Amex was also ordered to pay ASIC’s cost of the proceedings.
On 5 December 2022, ASIC commenced civil penalty proceedings in the Federal Court against Amex alleging contraventions of DDO relating to two co-branded credit cards, the David Jones American Express Card and the David Jones American Express Platinum Card, that were distributed through David Jones department stores