American Express Settles $230 Million Over Misleading Marketing and Practices

​American Express has agreed to pay $230 million to resolve federal investigations and civil allegations tied to deceptive practices in marketing credit cards and wire transfer services. The settlement addresses both criminal and civil probes initiated by the U.S. Department of Justice (DOJ) and other regulatory bodies.

The DOJ accused the credit card giant of employing misleading sales tactics targeting small- and medium-sized businesses. Employees allegedly overstated benefits, such as tax savings and rewards, while downplaying or misrepresenting associated fees. In some cases, credit checks were conducted without consent, or cards were issued to businesses using false or incomplete employer identification numbers (EINs). Prosecutors highlighted that fictitious EINs like "123456788" were used during a period when the company was replacing co-branded cards in 2015 and 2016.

A separate probe focused on wire transfer products introduced in 2018 and 2019. Customers were falsely assured that fees associated with these services were entirely tax-deductible as business expenses. Sales pitches also claimed reward points earned through the transactions were tax-free, which was later revealed to rely on flawed tax advice.

Following an internal investigation in 2021, American Express fired about 200 employees and discontinued the wire products later that year. The company stated it had cooperated fully with the investigations and had taken corrective measures, including policy changes, enhanced training, and adjustments to its compensation structure.

Under the settlement terms, American Express will pay $138.4 million to resolve criminal allegations through a non-prosecution agreement with the U.S. Attorney’s Office for the Eastern District of New York. An additional $108.7 million will be paid to settle civil claims with the DOJ’s Civil Division. The company will receive credits toward its total penalties for fulfilling specific terms of the agreements.

While denying certain allegations, such as claims of falsified financial information and deceptive credit card sales practices, American Express acknowledged the settlement as an opportunity to move forward. The company also noted that it had reached an agreement with the Federal Reserve regarding related matters, which is expected to be finalized in the coming weeks.

This resolution marks one of several significant regulatory settlements within the financial industry in recent years. Observers say the case underscores the heightened scrutiny on practices that undermine consumer trust and regulatory compliance.