Credit card giant American Express (Amex) has agreed to pay $85 million to around 250,000 consumers for violating consumer protection laws in marketing, billing and debt collection practices, reported the New York Times on Monday, with the financial institution also expected to pay up to $27.5 million in fines to regulators.

Investigations into Amex consumer practices first came about after consumers had complained about Amex's Blue Sky travel reward credit card program, which had misleadingly promised a $300 reward for signing up.

The multiagency investigation - including regulators from the Consumer Financial Protection Bureau (CFPB), the Federal Reserve, the Office of the Comptroller of the Currency and the Utah Department of Financial Institutions - also discovered that American Express were discriminating against credit card applicants based on their age; and lying to customers that paying off old debts would improve their credit score - while not reporting the payments to the credit bureaus at all.

The violations took place "at all stages of the game - from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt," said Richard Cordray, director of the CFPB to the Los Angeles Times.

The affected customers should expect refunds by March 2013, regulators added. Additionally, about 50 percent of the refund money will go to customers who were charged late fees on certain cards based on a percentage of the debt, which is against the law, reported the LA Times. Those customers will get the improper late fee refunded, with interest.

American Express, which has been ranked as one of the world's top twenty most admired companies in the world byFortune magazine, told reporters that it had already outlined plans to address each of the violations and said that it had "cooperated fully" with regulators during the entire investigation.

In a statement, the company added that it was "continuing its own internal reviews and is also cooperating with regulators in their ongoing regulatory examination of add-on products in accordance with an industry-wide review."

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his is the third major consumer action case taken by the CFPB since it was created in 2010 to oversee credit cards, mortgages and other products. In July, the Capital One credit card company agreed to pay a $210 million fine to address its sales of credit-protection products, while Discover Financial Services agreed to refund $200 million to credit card customers last week, and pay a $14-million civil penalty, for violations related to add-on products, such as payment-protection plans.