American Express to Pay $230 Million to Settle Investigations Into Sales Practices
American Express said Thursday (Jan. 16) that it expects to pay $230 million to settle previously disclosed investigations by the U.S. Department of Justice and the Federal Reserve.
The company entered into agreements with the Justice Department and expects a resolution with the Federal Reserve to be finalized within weeks, American Express said in a statement issued Thursday.
The Justice Department said Thursday that American Express has agreed to pay $108.7 million to settle allegations that it engaged in deceptive sales tactics and falsified information while failing to follow applicable regulation.
The United States alleged that the company deceptively marketed credit cards through the conduct of an affiliated entity from 2014 to 2017 and used “dummy” employer identification numbers (EINs) to deceive its federally insured financial institution into allowing small business customers to acquire credit cards without the required information in 2015 and 2016, the Justice Department said in a Thursday (Jan. 16) press release.
“Today’s 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,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in the release.
American Express said in its Thursday statement that the agreements with the Justice Department and the Federal Reserve resolve previously disclosed investigations into sales practices that ended in 2021 or earlier.
“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 organizational changes, and enhancing policies, compliance and training programs,” the statement said.
It was reported in 2021 that the Federal Reserve was looking to see if American Express harnessed strong and deceptive sales practices for card sales to business owners and if clients experienced negative effects.
A representative of American Express said at the time that the company had been “cooperating with a regulatory review of small business credit card sales between 2015 and 2016” as of spring 2020.
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