Amex faces $230 million penalties for deceptive practices

Amex to pay $230M in penalties for deceptive sales practices involving credit cards, wire services to small businesses.

American Express has agreed to pay approximately $230 million in penalties related to deceptive practices in the sale of credit cards and wire services to small businesses.

The settlement breaks down to a $108.7 million civil penalty from the Justice Department and includes a non-prosecution agreement with the Eastern District of New York. This follows a criminal investigation into the company’s practices.

Additionally, American Express has reached a preliminary agreement with the Federal Reserve, which is expected to be finalised soon. The penalty from the Federal Reserve is included in the total $230 million.

Reports by the Wall Street Journal highlighted instances where some Amex salespeople pressured business owners to boost sales for credit cards and other products. This included misrepresenting card rewards and fees, as well as checking credit reports without proper consent.

The Journal also reported on deceptive marketing practices regarding wire products that were misleadingly pitched as ways to avoid tax payments. Furthermore, Amex was accused of entering “dummy” employer identification numbers on small-business credit card accounts to artificially inflate sign-ups.

American Express stated that it has cooperated with regulatory agencies to address these issues, which included staff discipline and changes in training and organisation. The company claims that these problematic practices ended in 2021 or earlier.