UPDATE 1-AmEx to refund $85 mln to credit card customers

* AmEx to refund $85 mln to 250,000 consumers, CFPB says

* Company will also pay $27.5 mln penalty to federal regulators

* Problems include marketing, debt collection, late fees

(Adds CFPB official, background)

By Emily Stephenson

WASHINGTON, Oct 1 (Reuters) - American Express will refund $85 million to customers to resolve charges that three subsidiaries broke consumer protection laws across the credit card business, U.S. regulators said on Monday.

Subsidiaries misrepresented the perks consumers would receive if they enrolled in a credit card program, charged certain consumers higher late fees than were legally permissible, misled consumers about debt collection and committed other violations, the U.S. Consumer Financial Protection Bureau said.

In addition to the refund to about 250,000 customers, American Express will pay civil penalties totaling $27.5 million to the CFPB, Federal Deposit Insurance Corp, the Federal Reserve and the Office of the Comptroller of the Currency.

"Several American Express companies violated consumer protection laws and those laws were violated 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," CFPB Director Richard Cordray said.

The consumer bureau was created by the 2010 Dodd-Frank financial law and charged with overseeing credit cards, mortgage loans and other consumer financial products.

Since opening in July 2011, the agency has gone after credit card companies for violating consumer laws. Discover Bank, part of Discover Financial Services , agreed to pay $214 million to resolve charges of deceptive marketing. Capital One Financial Corp was fined $210 million in July on similar charges.

The latest probe identified marketing violations and other problems that occurred from 2003 to the spring of 2012 at American Express Centurion Bank, American Express Bank and American Express Travel Related Services Company.

Those companies are responsible for notifying consumers.

"From the moment we learned of the wrongdoing at American Express, we have been troubled by the range of problems that our examination process uncovered," said Kent Markus, assistant director of enforcement at the CFPB. "The legal violations we discovered span the lifecycle of a consumer's experience with American Express cards."

American Express is conducting an internal probe of the violations and has already counted a "substantial portion" of expenses related to the charges against its earnings, spokeswoman Marina Norville said.

American Express said in February that it was expecting regulators to bring enforcement actions related to late fees charged on certain card accounts.

Consumers are expected to receive payments by March 15, 2013, the CFPB said.

(Reporting by Emily Stephenson; Editing by Leslie Gevirtz, Bernard Orr)

((Emily.Stephenson@thomsonreuters.com)(202 354 5823))