American Express will pay $230 million to settle US allegations of fraudulent sales practices By Reuters
By Jonathan Stempel
NEW YORK (Reuters) – American Express said on Thursday it would pay about $230 million to settle U.S. criminal and civil investigations into alleged fraudulent practices in the sale of credit card and wire transfer products to small business customers.
The credit card and travel services company has agreed to pay $138.4 million, including about $108 million in penalties, and enter into a nonprosecution agreement to end criminal and civil investigations by the U.S. Department of Justice.
Amex said it also reached a separate agreement in principle with the Federal Reserve that should become final in the coming weeks.
The New York-based company said it cooperated extensively with investigators, discontinued some products, disciplined staff and improved compliance and training.
Amex also said the problems uncovered by investigators ended by 2021 at the latest, and the payout does not affect its 2024 earnings forecast.
The Justice Department alleged that from 2014 to 2017, Amex misrepresented rewards and fees on cards and whether credit checks would be performed without customers’ consent, and submitted false financial information to potential customers.
It also alleged that from 2018 to 2021, Amex misled customers in sales pitches about the tax benefits of wire transfer products known as Payroll Rewards and Premium Wire.
These products were the subject of a non-prosecution agreement.
That contract contained many internal communications about the products, such as employee complaints calling Premium Wire a “very questionable product” where customers could “write off the costs as a business expense and benefit personally.”
The Justice Department also blamed Amex sales staff for misleading regulators by entering “false” employer identification numbers such as “123456788” when opening small business credit cards to replace discontinued co-branded Amex cards.
