American Express\u00a0will pay a total of about $230 million to resolve federal wire fraud investigations, and to settle civil allegations of deceptive marketing, the company said Thursday.<\/p>\n
The tally includes more than $138 million as part of a non-prosecution agreement with the U.S. Attorney\u2019s Office in Brooklyn, New York, related to allegations that American Express gave customers \u201cinaccurate tax advice\u201d for two wire products.<\/p>\n
Separately, the banking giant will pay $108.7 million to resolve civil claims by the\u00a0Department of Justice\u2019s Civil Division\u00a0that it deceptively marketed credit cards to small businesses, among other allegations.<\/p>\n
Amex said it has also reached an \u201cagreement in principle with the Staff of the Board of Governors of the Federal Reserve System,\u201d which it expects to finalize in the coming weeks.<\/p>\n
\u201cPursuant to the agreements and after crediting, American Express will pay approximately $230 million in total to resolve these matters,\u201d Amex said.<\/p>\n
The big settlement follows recent agreements by other large companies, including\u00a0Mastercard\u00a0and\u00a0Block, to settle claims from prosecutors or regulators.<\/p>\n
\u201cAmerican Express misled their customers by touting tax breaks that simply didn\u2019t exist,\u201d said Harry Chavis, special agent in charge for the IRS\u2019s New York criminal investigation division in New York, in a statement.<\/p>\n
Chavis said, \u201cThis deceitful marketing campaign \u2026 involved hundreds of employees defrauding their customers and the government.\u201d<\/p>\n
Prosecutors said in a press release that Amex \u2014 in 2018 and 2019 \u2014 launched the wire products Payroll Rewards and Premium Wire, which were \u201cmarketed as a means to generate tax savings.\u201d<\/p>\n
Customers, which primarily included small- and mid-sized businesses, were told that the fees from the wire payments were tax-deductible as a business expense and that the customers otherwise would have paid taxes on the fees, prosecutors said.<\/p>\n
Customers also were told that \u201cMembership Reward\u201d points, received in exchange for the transactions, were earned tax-free, and therefore outweighed the true cost of the fees.<\/p>\n
But that pitch \u201crelied on incorrect tax advice, namely, that the wiring fee was deductible in its entirety as a business expense,\u201d prosecutors said.<\/p>\n
\u201cIncurring a wiring fee\u2014far in excess of that offered by competitors in the marketplace\u2014for the purpose of generating a personal benefit is not an \u2018ordinary\u2019 and \u2018necessary\u2019 business expense,\u201d as is required, they said.<\/p>\n
An internal investigation into those marketing practices in early 2021 led to about 200 employees being fired, prosecutors said. By November of that year, the two products were discontinued entirely.<\/p>\n
The separate civil settlement announced Thursday centered on allegations that AmEx \u201cdeceptively marketed credit cards\u201d through \u201can affiliated entity that initiated sales calls to small businesses.\u201d<\/p>\n
The practices, which took place from 2014 through 2017, included \u201cmisrepresenting the card rewards or fees\u201d and \u201cwhether credit checks would be done without a customer\u2019s consent,\u201d the DOJ said.<\/p>\n
The practices also allegedly included \u201csubmitting falsified financial information for prospective customers, such as overstating a business\u2019s income.\u201d\u00a0<\/p>\n
Amex also allegedly tried to \u201cdeceive its federally insured financial institution\u201d to let small-business customers acquire credit cards without the legally required employer identification numbers \u2014 known as EINs.<\/p>\n
\u201cThe United States alleged that American Express employees used \u2018dummy\u2019 EINs such as \u2019123456788\u2032 in opening small business credit cards in 2015 and the first half of 2016,\u201d the DOJ said.<\/p>\n
Amex\u2019s settlement agreement with the DOJ\u2019s Civil Division does not include an admission of liability or wrongdoing by the company, which denied the allegations about the EINs and deceptive credit card sales practices.<\/p>\n
\u201cWhen 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,\u201d principal deputy assistant Attorney General Brian Boynton, head of the Civil Division, said in a statement.<\/p>\n
\u201cToday\u2019s 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,\u201d Boynton said.<\/p>\n<\/p>\n
American Express\u00a0will pay a total of about $230 million to resolve federal wire fraud investigations, and to settle civil allegations of deceptive marketing, the company said Thursday. The tally includes more than $138 million as part of a non-prosecution agreement with the U.S. Attorney\u2019s Office in Brooklyn, New York, related to allegations that American Express […]<\/p>\n","protected":false},"author":0,"featured_media":14092,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-14091","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=14091"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14091\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/14092"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=14091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=14091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=14091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}