American Express to Pay $230 Million in Fines
American Express has agreed to pay approximately $230 million in penalties over deceptive practices related to its small-business credit cards prior to 2021.
The settlements include a civil penalty from the Justice Department and a non-prosecution agreement with the Eastern District of New York. An agreement with regulators at the Federal Reserve is also expected to be finalized in the coming weeks.
The Justice Department says that that American Express employees misrepresented credit card rewards and fees between 2014 and 2017. They also gave out incorrect information on whether credit checks would be done without customers consent and submitted false financial information for prospective customers to improve chances of approval.
From 2018 to 2021, American Express also misled customers in sales pitches about the tax benefits of wire transfer products known as Payroll Rewards and Premium Wire while charging much higher fees than other similar services. American Express sales employees allegedly told customers that the wire transfer fees were tax deductible as business expenses, while the reward points earned on the transaction were not taxable. These products are no longer available.
The Justice Department also says that American Express allowed certain small business customers to acquire American Express credit cards without the required employer identification numbers (EINs). American Express employees used “dummy” EINs such as “123456788” in opening small business credit cards in 2015 and the first half of 2016.
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