Major Settlement Reached in American Express Marketing Case

American Express’s $230 million settlement highlights a critical moment in addressing financial malpractices affecting small business owners.

At a Glance

American Express has agreed to settle for $230 million over deceptive sales practices.
The settlement includes $138.4 million in fines to the DOJ.
Alleged tactics included aggressive sales, unsolicited credit cards, and false financial reporting.
AmEx resolved the matter without admitting liability.

Settlement Details

American Express agreed to pay approximately $230 million to settle deceptive marketing claims targeting small business owners. This settlement covers both criminal and civil probes, featuring $138.4 million in penalties as per the DOJ. The allegations include aggressive sales, unsolicited credit cards, and misrepresentations of rewards and fees that transpired between 2014 and 2017.

Investigations found that AmEx staff sometimes provided false financial data, overstating business incomes and using fake EINs to help clients obtain credit cards. The alleged misconduct incorporated misleading tax advice, falsely advertising tax deductions on wire products such as wiring fees.

American Express will pay approximately $230 million to resolve a Department of Justice criminal wire fraud investigation and settle allegations of deceptive marketing

It follows recent agreements by Mastercard and Block to settle claimshttps://t.co/ct5JOHHEOW

— NBC New York (@NBCNewYork) January 17, 2025

Implications and Reactions

The settlement does not include an admission of liability by AmEx, even as the DOJ emphasized accountability. AmEx cooperated by taking corrective measures, including firing approximately 200 employees and revising its systems following an internal inquiry. The DOJ’s resolution underlines their commitment to preserving trust within financial systems.

The company notes existing provisions for the settlement will not affect its 2024 earnings guidance. An agreement with the Federal Reserve marks another step towards maintaining transparency in dealing with U.S. small-business clients.

Internal Actions and Future Outlook

In response, American Express has thoroughly rehauled training and compensation systems, laying a foundation for preventing future discrepancies. By acknowledging and correcting grave errors from 2014 to 2017, AmEx steps beyond compliance into a quest for reform and corporate integrity.

This settlement aligns with similar actions by Mastercard and Block, emphasizing a broader trend toward stricter enforcement of ethical practices within financial services. As AmEx moves forward, ongoing scrutiny will likely shape public perception and operational dynamics for major credit providers.