American Express settles with regulators

American Express Co. said it has reached a settlement with regulators for convenience checks issued to cardholders that were later declined.

American Express _ through its subsidiaries American Express Centurion Bank and American Express Bank _ sent checks to credit card customers but then declined to honor them because of changes in the customers' credit ratings or limits.

American Express will pay a civil penalty of $250,000 and will pay card members for any fees incurred by the bank for the bounced check _ an estimated $3.5 million.

Under the agreement with the Federal Deposit Insurance Corporation and Office of Thrift Supervision, American Express will also contact affected consumers to help them clear up any problems the returned checks might have caused with credit reporting agencies or bad check registries.

American Express has also discontinued its convenience check program until it can offer a program that does not raise regulatory concerns.

Shares of American Express gained 11 cents to $23.35 in after-hours trading, following a loss of 58 cents to close at $23.24 in Tuesday's regular session.