American Express To Pay $230 Mln To Resolve Investigations Into Historical Sales Practices

American Express

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(RTTNews) - American Express Co. (AXP) said that it has entered into agreements with the U.S. Department of Justice and reached an agreement in principle with the Staff of the Board of Governors of the Federal Reserve System to resolve previously disclosed investigations into historical sales practices for certain U.S. small business customers, which the company ended in 2021 or earlier. As part of these agreements, American Express will pay approximately $230 million in total to resolve these matters.

The U.S. Department of Justice 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.

American Express noted that it cooperated extensively with the agencies and regulators, taking decisive voluntary action to address these issues. This included discontinuing certain products several years ago, conducting a comprehensive internal review, taking appropriate disciplinary measures, making organizational changes, and enhancing policies, compliance, and training programs.

According to the company, the costs associated with the agreements were largely reserved for in prior periods and do not impact the 2024 guidance previously provided. The resolution with the Federal Reserve is expected to be finalized in the coming weeks.