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Home News American Express Settles Deceptive Sales Practices Case For $230 Million

American Express Settles Deceptive Sales Practices Case For $230 Million

by Celia

American Express (Amex) has agreed to pay approximately $230 million to settle both criminal and civil investigations into allegations of deceptive sales practices involving its credit card and wire transfer products for small business customers. The settlement includes a payment of $138.4 million, which consists of around $108 million in fines, and will resolve probes conducted by the U.S. Department of Justice (DOJ).

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As part of the settlement, American Express will enter into a non-prosecution agreement with the DOJ, which concludes its involvement in the investigation into these issues. Additionally, Amex has reached a separate in-principle agreement with the Federal Reserve, which is expected to be finalized soon.

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In response to the findings, American Express has fully cooperated with investigators, halted the sale of certain products, disciplined employees, and enhanced its compliance procedures and training programs. The company also stated that the problematic practices, which occurred between 2014 and 2021, ended no later than 2021. Furthermore, the settlement is not expected to impact Amex’s financial outlook for 2024.

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The DOJ investigation uncovered a range of deceptive practices. Between 2014 and 2017, American Express misrepresented card rewards, fees, and credit check procedures, and submitted inaccurate financial information for potential customers. Additionally, from 2018 to 2021, Amex misled customers in sales presentations regarding the tax benefits of certain wire transfer products, specifically Payroll Rewards and Premium Wire. These products are now the focus of the non-prosecution agreement.

The investigation also revealed internal concerns about the Premium Wire product, which employees referred to as “very questionable.” Some sales staff allegedly misled regulators by entering false employer identification numbers when opening small business credit cards in place of discontinued co-branded cards.

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