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American Express Agrees To Pay $108.7M To Settle Allegations of Deceptive Marketing and "Dummy" Account Information MENU News * All News * Blogs * Photo Galleries * Podcasts * Press Releases * Speeches * Videos Archived Press Releases Archived News --------------------------------------------------------------------- Para Noticias en Espanol Press Release American Express Agrees to Pay $108.7M to Settle Allegations of Deceptive Marketing and "Dummy" Account Information Thursday, January 16, 2025 Share right caret * Facebook * X * LinkedIn * Email For Immediate Release Office of Public Affairs The American Express Company (American Express), based in New York, New York, has agreed to pay a $108.7 million civil penalty to resolve allegations that it violated the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) by deceptively marketing credit card and wire transfer products and by entering "dummy" Employer Identification Numbers in the credit card accounts of its affiliate bank. "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," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. "Today's 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." The United States alleged that, from 2014 through 2017, American Express deceptively marketed credit cards through the conduct of an affiliated entity that initiated sales calls to small businesses. The alleged deceptive practices included misrepresenting the card rewards or fees and whether credit checks would be done without a customer's consent and submitting falsified financial information for prospective customers, such as overstating a business's income. The United States also alleged that American Express engaged in practices to deceive its federally insured financial institution into allowing certain small business customers to acquire American Express credit cards without the required employer identification numbers (EINs). EINs are required by law if the card recipient is a business entity such as a corporation or partnership; the requirement does not apply to sole proprietors. The United States alleged that American Express employees used "dummy" EINs such as "123456788" in opening small business credit cards in 2015 and the first half of 2016. These cards were sold to replace an American Express co-branded credit card that was being discontinued during that time period. American Express allegedly allowed these "dummy" EINs to remain on the credit card accounts for up to two years before remediating the problem. American Express allegedly knew that many of the small business applicants had previously acquired American Express-issued co-brand cards where the card application stated that EINs were required for corporations or partnerships, but if the applicants left the EIN line blank, American Express would assume they are sole proprietors. That practice exacerbated the effects of American Express's failure to enter proper EINs when it sold these customers replacement cards. Finally, the United States further contended that American Express employees deceptively marketed wire transfer products known as Payroll Rewards and Premium Wire to its small business customers from 2018 through 2021, making false assertions regarding these products' tax benefits. As to both products, American Express allegedly would wire money for an above-market fee that was far in excess of that offered by competitors in the marketplace and award the businesses or the business owners credit card membership reward points. American Express sales employees allegedly told customers that the wire transfer fees were tax deductible as business expenses, while the reward points earned on the transaction were not taxable, and thereby afforded the customer tax-free benefits. The United States contended, however, that the above-market wiring fee was not deductible as an ordinary or necessary business expense insofar as it was incurred by a customer solely for the purpose of generating a personal benefit. Contemporaneous with the civil resolution, American Express will enter into a Non-Prosecution Agreement with the U.S. Attorney's Office for the Eastern District of New York and pay a criminal fine and forfeiture. That agreement deals exclusively with the Payroll Rewards and Premium Wire programs referenced above. Under the terms of the civil settlement, American Express will receive a credit toward the satisfaction of the civil penalty in the amount of $30.35 million if it makes a full payment of the forfeiture and fine amounts due under the criminal resolution. "This multi-million-dollar settlement holds American Express accountable for violating FIRREA through unlawful sales tactics and recordkeeping requirements, and deceiving small business customers who placed their trust in the Company," said Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Mid-Atlantic Region. "The FDIC-OIG will continue to work with our law enforcement partners to investigate financial crimes that harm customers and undermine the integrity of our Nation's financial institutions." "Today's multi-million dollar settlement should make clear that financial companies who engage in fraudulent and deceptive practices will be held accountable for their actions," said Special Agent in Charge John T. Perez of Headquarters Operations, Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau. "We are proud to have worked alongside our federal law enforcement partners to achieve this result." Attorneys Daniel Spiro and Mary Beth Hickcox-Howard of the Civil Division's Commercial Litigation Branch, Fraud Section handled the matter with assistance from the Legal Division of the Federal Reserve Board of Governors and the Office of Comptroller of the Currency's Chief Counsel's Office. Senior Special Agent Brittany Harding of the Office of the Inspector General for the Department of Treasury, Special Agent Will Burmeister of the Office of the Inspector General for the Federal Reserve Board and Senior Special Agent Mike Serra from the Office of the Inspector General for the Federal Insurance Deposit Corporation investigated the matter. Except for the conduct admitted in connection with the criminal resolution, the claims resolved by the settlement are allegations only. There has been no determination of liability. View the settlement here Updated January 16, 2025 --------------------------------------------------------------------- Topic Financial Fraud Components Civil Division USAO - New York, Eastern Press Release Number: 25-69 Related Content Press Release United States Joins Lawsuit Against Former Executives of Kabbage Inc. 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