(Reuters) - The Federal Court of Australia fined a local unit of American Express (NYSE:AXP) (AmEx) A$8 million ($5.36 million) for breaching design and distribution rules for two of its co-branded credit cards, the Australian corporate regulator said on Friday.
The court found that American Express Australia distributed two credit cards primarily to customers in stores of luxury brand David Jones between late May and early July in 2022 without appropriately determining the target market.
"A penalty of this order ensures it has a 'sting' sufficient to deter both repetition by American Express and contravention by other providers of financial products, and one that goes beyond being a mere 'cost of doing business'," Federal Court Justice Ian McNeil Jackman said.
AmEx Australia ought to have known high cancelled application rates suggested the target market determinations (TMDs) for the cards were no longer appropriate, the Australian Securities & Investments Commission (ASIC) said in its statement.
AmEx did not stop issuing the credit cards when it had not reviewed the TMDs, the regulator added.
A TMD is a document that describes who a product is appropriate for (target market), and any conditions around how that product can be distributed to customers.
($1 = 1.4919 Australian dollars)