American Express Agrees to $108.7 Million Settlement Over Alleged Deceptive Practices
American Express has agreed to pay a $108.7 million civil penalty to resolve allegations that it engaged in deceptive marketing practices and improper recordkeeping related to its credit card and wire transfer products, according to the U.S. Department of Justice (DOJ). The settlement addresses claims that the company violated the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).
Federal authorities allege that from 2014 to 2017, an affiliated entity of American Express misled small businesses when marketing credit cards. The alleged deceptive tactics included misrepresenting card fees and rewards, conducting unauthorized credit checks, and inflating financial information on customer applications.
The DOJ also contends that between 2015 and mid-2016, American Express employees entered “dummy” Employer Identification Numbers (EINs) on applications for small business credit cards. EINs are typically required for businesses structured as corporations or partnerships, but not for sole proprietors. The government alleges that American Express permitted these incorrect EINs to remain on accounts for up to two years before addressing the issue.
Additionally, the settlement resolves allegations that from 2018 to 2021, American Express employees misrepresented tax benefits associated with wire transfer products marketed to small businesses. Federal investigators claim that the company charged above-market fees for wire transfers while misleading customers about the tax deductibility of those fees and the taxation of reward points earned through the transactions.
As part of the resolution, American Express will enter a Non-Prosecution Agreement with the U.S. Attorney’s Office for the Eastern District of New York. The agreement, which relates specifically to the Payroll Rewards and Premium Wire programs, includes a criminal fine and forfeiture. The company will receive a $30.35 million credit toward the civil penalty if it fully satisfies the financial terms of the criminal resolution.
Officials emphasized the significance of the case in maintaining trust in the financial system. “When financial companies engage in deceptive sales tactics or falsify information, they threaten the integrity of our financial system,” said Principal Deputy Assistant Attorney General Brian M. Boynton of the DOJ’s Civil Division.
Federal agencies involved in the investigation included the Office of Inspector General for the Federal Reserve Board, the Office of Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC).
American Express has not admitted liability in the civil settlement, and the allegations remain claims rather than legal determinations.