On Jan. 16, DoJ fined AmEx for deceptive marketing, dummy data.
DoJ reported American Express agreed to pay a $108.7mn civil penalty in order to settle allegations of deceptive marketing and entering dummy account information.
Allegedly violated Financial institutions reform, recovery and enforcement act of 1989 (FIRREA), 12 USC 1833a, by deceptively marketing credit card, wire transfer products.
Enter dummy employer identification numbers (EIN) in affiliate credit card accounts.
Deceptive Marketing Allegations
From 2014 through 2017, AmEx deceptively marketed credit cards through the conduct of an affiliated entity that initiated sales calls to small businesses.
Misrepresented card rewards program/fees, if credit check conducted without consent.
Falsified financial data for prospective customers, such as overstating business income.
EIN Violations
AmEx also engaged in practices to deceive its federally insured financial institutions.
Deceived into allowing small business customers to acquire their cards without EINs.
Company used dummy employment ID no's in opening small business credit cards.
Cards were sold to replace AmEx co-branded credit card that was being discontinued.
Firm allowed false EINs to remain on card accounts for up to two years before fixing.
If the applicants left the EIN line blank, AmEx would assume they are sole proprietors.
Exacerbated effects of its failure to enter proper EINs when selling replacement cards.
Allegations - Wire Transfer Products
Deceptively marketed wire transfer products known as Payroll Rewards, Premium Wire.
Deception occurred in marketing to its small business customers from 2018 - 2021.
Making false assertions on their tax benefits; would wire money for above-market fee far in excess of that offered by competitors, award customer credit card reward points.
Staff also told customers wire transfer fees were tax deductible as business expenses.
Also, that reward points earned on transaction not taxable, affording tax-free benefits.
US stated the above-market wire fee was not deductible as a business expense since it was incurred by a customer solely for the purpose of generating a personal benefit.
Enforcement
This multi-million-dollar settlement holds AmEx accountable for violating FIRREA.
Violations via unlawful sales tactics and deceiving the firm's small business customers.
Under terms of civil settlement, AmEx will receive a credit toward the civil penalty in the amount of $30.35 million if it makes a full payment of the criminal amounts.
DoJ argued FIRREA violations were predicated on violations of 18 USC 1341 (mail fraud), 18 USC 1343 (wire fraud), 18 USC 1005 (bank entries, reports, transactions).
Parallel Non-Prosecution Agreement
Under the Non-prosecution agreement, AmEx will pay a criminal fine and forfeiture.
