American Express (Amex) has agreed to pay approximately $230m to settle allegations of using deceptive tactics for sales of credit card and wire transfer products.
These practices were deemed misleading to small-business owners.
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The settlement was reached with federal prosecutors and the Federal Reserve.
The issue at hand originated from Amex representatives promoting services such as the Premium Wire offering, which was pitched as a means to reduce taxes and accumulate credit-card points.
Following the allegations, Amex ceased the Premium Wire service and associated sales tactics in 2021 and dismissed employees implicated in the misconduct.
In response, American Express said: “We cooperated extensively with these agencies and our regulators and took decisive voluntary action to address these issues, including discontinuing certain products several years ago, conducting a comprehensive internal review, taking appropriate disciplinary measures, making organisational changes, and enhancing policies, compliance, and training programmes.
The financial penalty of $230m is split between two agreements, with $138m going to the Eastern District of New York and the Justice Department, while a portion is earmarked for the Federal Reserve.
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By GlobalDataThis latter agreement-in-principle is expected to be finalised in the upcoming weeks.
Amex has indicated that the costs associated with these settlements were largely accounted for in previous financial periods and will not affect the company’s financial guidance for 2024.
US Justice Department Civil Division principal deputy assistant attorney general Brian Boynton said: “When financial companies engage in deceptive sales tactics or falsify information to cover up a failure to follow applicable regulations, they threaten the integrity of our financial system.
“The settlement makes clear that the department will hold accountable those who violate the trust placed in them to follow the rules governing our financial institutions and to be truthful about their business practices.”
