American Express said on Thursday that it would pay $230 million to settle civil and criminal allegations that the company used deceptive sales tactics related to credit card and wire transfer products sold to small business customers.
The Justice Department’s civil division claimed that, from 2014 through 2017, the credit card and travel services giant misrepresented its card rewards and fees, and whether credit checks would be done without a customer’s consent. The Justice Department also said the company had submitted falsified financial information for prospective customers, such as overstating a business’s income.
American Express was also accused of tricking its bank into issuing credit cards to small business customers without employer identification numbers, or E.I.N.s, which are required for certain businesses, the department said.
Then, from 2018 to 2021, the department claimed, American Express deceptively sold wire transfer products known as Payroll Rewards and Premium Wire, making false claims about the products’ tax benefits.
The Justice Department settlement includes a $108.7 million civil payment related to those allegations.
American Express also entered a separate nonprosecution agreement with the U.S. attorney’s office for the Eastern District of New York to resolve a criminal investigation related to the Payroll Rewards and Premium Wire products. The company will pay about $138 million to resolve that matter.
Amex also said on Thursday that it had reached an agreement in principle with the Federal Reserve System to resolve investigations into the same practices. The settlements include a potential credit the company is expected to receive, bringing the overall total penalty to $230 million, American Express said.
The credit card giant said it “cooperated extensively” with the agencies and its regulators, and took “voluntary action” to address the issue. That included discontinuing certain products, conducting a comprehensive internal review and taking disciplinary measures, making organizational changes and enhancing its internal controls.
American Express said the settlement costs were already set aside and disclosed in prior periods and will not affect its 2024 earnings guidance.