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American Express to Pay $230 Million in Federal Settlement Over Fraud Allegations

by Frank Ulom
17 January 2025
in Business
American Express to Pay $230 Million in Federal Settlement Over Fraud Allegations

American Express has agreed to pay $230 million to resolve federal allegations of deceptive marketing practices and civil fraud, the U.S. Department of Justice (DOJ) announced Thursday.

The settlement includes a $108 million civil penalty for alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). Additionally, the company has entered a non-prosecution agreement, committing to pay over $138 million for sales practices that misled consumers, including providing false tax advice.

The DOJ alleged that from 2014 to 2017, American Express used deceptive marketing tactics for credit cards targeting small businesses, including overstating business income, misrepresenting card rewards and fees, and submitting applications without proper consent. It also accused the company of falsifying employer identification numbers to bypass legal requirements.

Furthermore, from 2018 to 2021, American Express allegedly misled small businesses by claiming wire transfer fees were tax-deductible as business expenses when they were not.

Brian Boynton, principal deputy assistant attorney general, stressed the importance of accountability, stating, “When financial companies engage in deceptive sales tactics or falsify information… they threaten the integrity of our financial system.”

In a statement, American Express acknowledged the settlement, noting it cooperated extensively with investigators, discontinued the problematic products years ago, and implemented internal reforms. The company expects to finalise a related resolution with the Federal Reserve soon.

This settlement underscores the DOJ’s commitment to addressing fraud in the financial sector and protecting consumers from deceptive practices.

Tags: American Express NewsUnited States News
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