American Express said Thursday it will pay $230 million to resolve 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 alleged that from 2014 to 2017, the credit card and travel services giant misrepresented its card rewards and fees and whether credit checks were conducted without customer consent. The Justice Department also said the company submitted false financial information to potential customers, such as overstating a company's income.
American Express was also accused of tricking its bank into issuing credit cards to small business customers without employer identification numbers (EINs) required for certain businesses, the department said.
Then, from 2018 to 2021, the department alleged that American Express fraudulently sold remittance products called Payroll Rewards and Premium Wire while making false claims about the products' tax benefits.
The settlement with the Justice Department includes a civil settlement of $108.7 million related to these allegations.
American Express also entered into a separate non-prosecution agreement with the U.S. Attorney's Office for the Eastern District of New York to resolve a criminal investigation related to its Payroll Rewards and Premium Wire products. The company will pay approximately $138 million to resolve the matter.
Amex also said Thursday it had reached an agreement in principle with the Federal Reserve System to end investigations into the same practices. The settlements include a potential loan the company is expected to receive, bringing the total penalty to $230 million, American Express said.
The credit card giant said it had worked “extensively” with authorities and its regulators and taken “voluntary measures” to address the issue. This included discontinuing certain products, conducting a comprehensive internal review and taking disciplinary action, implementing organizational changes and improving internal controls.
American Express said the settlement costs had already been deferred and disclosed in prior periods and would not impact its 2024 profit forecast.