American Express to pay $230 million to settle deceptive sales claims

[Craig Nigrelli]

THEIR SLOGAN USED TO BE “ THE AMERICAN EXPRESS CARD, DON’T LEAVE HOME WITHOUT IT”. NOW, AMERICAN EXPRESS WILL BE **OUT** $230-MILLION AFTER SETTLING WITH THE JUSTICE DEPARTMENT and others AMID ALLEGATIONS THAT IT ENGAGED IN DECEPTIVE MARKETING AND TOUTED TAX BREAKS TO CUSTOMERS, THAT DID NOT EXIST, BETWEEN 2014 AND 2021.
FEDERAL INVESTIGATORS ACCUSED AMERICAN EXPRESS OF ENTERING DUMMY ACCOUNT INFORMATION ON BEHALF OF SMALL BUSINESSES, WHICH IS A SHORT-CUT SALES PEOPLE USED TO INCREASE CARD SIGN-UPS AND IS AGAINST THE LAW. THE COMPANY IS ALSO ACCUSED OF MISREPRESENTING THE CARDS REWARDS OR FEES. ALSO, PROSECUTORS SAID AMEX WAS NOT UPFRONT ABOUT WHETHER CREDIT CHECKS WOULD BE DONE WITHOUT A CUSTOMER’S CONSENT AND THE DOJ ACCUSED THE COMPANY OF SUBMITTING FALSE FINANCIAL INFORMATION, SUCH AS OVERSTATING A BUSINESS’S INCOME.
THE WALL STREET JOURNAL FOUND THAT AMERICAN EXPRESS LAUNCHED AN AGGRESSIVE CAMPAIGN TO KEEP BUSINESS CARD-HOLDERS, WHICH LED TO AN ERA OF ESCALATING SALES GOALS AND HEFTY COMMISSIONS.
Brian Boynton, the head of the Justice Department’s Civil Division 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.”
AMERICAN EXPRESS ISSUED A STATEMENT, SAYING
“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.”
TO THAT END, AMERICAN EXPRESS FIRED 200 EMPLOYEES AFTER AN INTERNAL INVESTIGATION. THE 230-MILLION DOLLAR SETTLEMENT INVOLVED THE JUSTICE DEPARTMENT, THE FEDERAL RESERVE,AND THE U-S ATTORNEY’S OFFICE FOR THE EASTERN DISTRICT OF NEW YORK AS AMEX IS BASED IN NEW YORK CITY. FOR MORE UNBIASED UPDATES, DOWNLOAD THE STRAIGHT ARROW NEWS APP