American Express to pay $230 million to settle US charges over misleading sales practices

By Jonathan Stempel

NEW YORK (Reuters) – American Express said on Thursday it would pay $230 million to sell credit card and wire transfer products to small business customers under U.S. criminal and civil investigations.

The credit card and travel services company agreed to pay $138.4 million, including about $108 million in penalties, and a non-prosecution agreement to end criminal and civil investigations by the U.S. Department of Justice.

Amex said it has reached a separate agreement in principle with the Federal Reserve that should be finalized in the coming weeks.

The New York-based company said it has cooperated extensively with investigators, discontinued some products, disciplined employees and improved compliance and training.

Amex also said the problems identified by investigators ended after 2021 and that the charge would not affect its 2024 revenue forecast.

The Justice Department alleged that from 2014 to 2017, Amex conducted card rewards and payments and credit checks without customers’ consent and provided false financial information to prospective customers.

Additionally, from 2018 to 2021, Amex misled customers about the tax benefits of wire transfer products such as Payroll Rewards and Premium Wire in sales.

These products were the subject of an immunity agreement.

That deal contained numerous internal communications about its products, such as employee complaints that Premium Wire customers “wrote off expenses as business expenses and benefited personally.”

The Justice Department convicted Amex sales employees of misleading regulators by entering employer identification numbers such as “123456788” to replace canceled Amex cards when opening small business credit cards.

(Reporting by Jonathan Stemple in New York; Additional reporting by Ismail Shakil and Ryan Patrick Jones; Editing by Depa Babington)