Class Action Accuses American Express of Pulling Consumers’ Credit Reports Without Consent

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A proposed class action alleges American Express falsely represents to prospective customers that its “Apply With Confidence” program allows them to check their eligibility for a credit card without impacting their credit score.

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According to the 33-page case out of California, American Express advertises, supposedly in the spirit of “transparency and certainty,” that a consumer can apply for a particular credit card—and find out if they are approved—without worrying about whether their application will affect their credit score until after they’ve accepted the offer.

Although AmEx represents that it will perform only a limited credit inquiry that does not affect a consumer’s credit score—known as a “soft” pull—as they shop around for a suitable card, the company nevertheless routinely performs without consent a “hard” credit pull before any application has been submitted, the filing alleges.

The complaint stresses that, unlike a soft inquiry, a hard pull can cause an individual’s credit score to drop by up to five points and is visible to third parties who obtain a consumer credit report. 

“Creditors often use the number of hard inquiries on a consumer’s credit report as a basis to deny an extension of credit,” the case says.

The suit adds that by performing a full credit inquiry without a consumer’s consent, American Express obtains more personal data than it initially told the consumer it would view.

Per the case, the federal Fair Credit Reporting Act (FCRA) and the California Consumer Credit Reporting Agencies Act (CCRAA) prohibit lenders from obtaining an individual’s full credit report without a “permissible purpose,” such as when a consumer initiates a transaction.

However, the suit contends, “[i]t is well established that merely inquiring about the possibility of a future transaction, or shopping for rates, is insufficient to satisfy the requirement of the FCRA for a creditor to initiate the kind of full credit inquiry that is allowed when a consumer has initiated a transaction.”

The suit further claims that American Express has violated state and federal laws by obtaining consumers’ full credit reports without consent and “under false pretenses.”

The plaintiff, a California resident, says she came across American Express’s “Apply With Confidence” program in September 2022 and submitted an application to see if she would qualify for one of its cards with no impact to her credit score. The plaintiff was informed later that month that she had been denied the requested credit card, and was “shocked, annoyed and frustrated” to find that American Express reported a hard inquiry on her Experian and Transunion credit reports, the suit relays.

The case states that American Express’s unauthorized hard inquiry remains on the plaintiff’s credit report and has damaged her creditworthiness.

The lawsuit looks to represent anyone who, in the past two years, had a hard credit inquiry procured by American Express where the company’s records reflect that the individual applied for an American Express product via a “no credit score impact until applicant accepts journey,” and the individual was not subsequently approved for the product, or did not accept the product that was offered after their application.

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