American Express has agreed to pay $230 million in penalties after settling with the Justice Department and others. The credit card company is paying the fine after 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 shortcut that salespeople used to increase card sign-ups, and is against the law. The company is also accused of misrepresenting the card’s rewards or fees.
Also, prosecutors said American Express 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.
“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,” Brian Boynton, the head of the Justice Department’s Civil Division, said.
American Express issued a statement, saying in part that it cooperated extensively with regulators, took decisive voluntary action to address the issues, and took appropriate disciplinary measures.
To that end, American Express fired 200 employees after an internal investigation.
The $230 million settlement involved the Justice Department, the Federal Reserve and the U.S. Attorney’s Office for the Eastern District of New York, as the company is based in New York City.
