American Express has agreed to pay approximately $230 million to resolve federal wire fraud investigations and settle civil allegations of deceptive marketing. The banking giant signed a non-prosecution agreement with New York federal prosecutors and will also pay $108.7 million to resolve civil claims by the Department of Justice’s Civil Division.
The settlement centers on allegations that American Express deceptively marketed credit cards to small businesses, touting tax breaks and other benefits that did not exist. Customers were misled into believing that fees from wire payments were tax-deductible as a business expense, while “Membership Reward” points received in exchange for transactions were claimed to be earned tax-free.
The company faced internal investigation and disciplinary action following an early 2021 probe, which led to the firing of about 200 employees. The two products involved, Payroll Rewards and Premium Wire, were discontinued entirely by November 2021.
American Express will also finalize an agreement with the Staff of the Board of Governors of the Federal Reserve System in the coming weeks. The company denied allegations about deceptive sales practices and obtaining Employer Identification Numbers (EINs) without proper authorization.
The settlement is seen as a significant step in holding financial companies accountable for their business practices, according to Principal Deputy Assistant Attorney General Brian Boynton. “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,” he said.
Source: https://www.cnbc.com/2025/01/16/american-express-doj-fraud-credit-cards-marketing-settlement.html