The U.S. Consumer Financial Protection Bureau said the company and two subsidiaries had engaged in unfair billing tactics and deceptive marketing, affecting more than 335,000 customers from 2000 to 2012.
Telemarketers led clients to believe the add-on products came with more favorable conditions than they really did, and charged too much for the services.
"We first warned companies last year about using deceptive marketing to sell credit card add-on products, and everyone should be on notice of this issue," CFPB Director Richard Cordray said in a statement.
The agency, which was set up after the 2007-09 crisis as part of a reform of the financial industry, also fined American Express $9.6 million.
Two other regulators also imposed financial sanctions. The Federal Deposit Insurance Corporation (FDIC) fined American Express Centurion Bank $3.6 million, while the Office of the Comptroller of the Currency imposed a $3 million fine on American Express Bank.
The add-on products included payment protection, with one enabling customers to cancel part of their outstanding balance, and another being designed to help customers in Puerto Rico to recover lost or stolen cards.
In one example, American Express would tell customers they would not be charged a fee if the account balance was paid every month, but didn't clearly say by when the payment needed to be made. As a result, some customers exceeded their credit card limits and incurred additional fees.
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