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For compliance violations: American Express must pay 230 million dollars

The financial services provider American Express (Amex) has agreed to pay around 230 million dollars to settle legal disputes in the USA.
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The financial services provider American Express (Amex) has accepted a total fine of around 230 million dollars to settle legal disputes in the USA. The US credit card group is accused by various supervisory authorities of misleading sales practices towards small businesses in particular.

Misconduct by American Express concerns US Department of Justice

The U.S. Department of Justice (DOJ) has accused American Express of misrepresenting material information about credit card and money transfer products between 2014 and 2017. In particular, customers for the "Payroll Rewards" and "Premium Wire" services were allegedly lured with potential tax savings that did not apply.

In addition, Amex sales representatives allegedly allowed business customers to purchase credit cards without presenting Employer Identification Numbers (EINs). EINs are required by law in the USA if the card recipient is a legal entity. American Express employees allegedly used fictitious EINs such as "123456788" when opening credit card accounts for small businesses in 2015 and the first half of 2016.

Amex has already responded to the investigations by the DOJ and the U.S. Attorney's Office for the Eastern District of New York. The credit card company has discontinued the Premium Wire offer and sales practices in 2021. In addition, around 200 employees were dismissed for misconduct.

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Non-prosecution agreement with the public prosecutor's office

As part of the agreement with the DOJ, AMEX has agreed to pay a fine. This is to settle allegations of misleading marketing practices in violation of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

AMEX entered into a Non-Prosecution Agreement (NPA) with the U.S. Attorney's Office for the Eastern District of New York, also for engaging in deceptive sales and marketing practices. In addition to paying a further fine, the credit card company has also agreed to cooperate with the US Attorney's Office for the next three years. In return, the public prosecutor's office will refrain from bringing charges. A total of 138 million US dollars will be paid to the two authorities.

The Fed, as the supervisory authority, will receive a further fine after an agreement in principle was reached here too. The total amount of the fines thus amounts to around 230 million US dollars.

Sources: Press releases of the US Department of Justice and of the United States Attorney's Office Eastern District of New York.

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