American Express has agreed to pay $230 million to settle charges from the Department of Justice (DOJ) that it engaged in deceptive marketing and deficient recordkeeping practices when pitching its credit cards to small businesses. The company allegedly entered “dummy” account information, misrepresented rewards and fees, and failed to disclose whether credit checks would be conducted without customer consent.
The DOJ alleged that these practices occurred from 2014 to 2021 and resulted in the firing of 200 employees after an internal investigation. Under the settlement, American Express will pay $108.7 million, plus 4% annual interest, and also agreed to a non-prosecution agreement with the U.S. Attorney’s Office for the Eastern District of New York, totaling $138.4 million.
The company cooperated with the Justice Department by updating its policies, discontinuing certain products, conducting an internal review, and taking disciplinary actions. American Express also reached an agreement with the Federal Reserve regarding past sales practices related to U.S. small business clients. The company expects this resolution to be finalized in the coming weeks.
Source: https://www.paymentsdive.com/news/amex-federal-government-doj-allegations-credit-cards-small-business/737635