American Express has reached a settlement agreement with the U.S. Department of Justice, agreeing to pay approximately $230 million to resolve a federal criminal wire fraud investigation and allegations of deceptive marketing practices. This settlement includes a significant payment of over $138 million as part of a non-prosecution agreement with federal prosecutors in Brooklyn, New York. The company faced allegations of providing inaccurate tax advice for two wire products and deceptively marketing credit cards to small businesses.
The settlement aims to address both criminal and civil claims against American Express. The company agreed to pay $108.7 million to resolve the claims brought by the Department of Justice's Civil Division, which highlighted misleading marketing strategies targeting small business owners. This payment is part of the broader settlement that encompasses the non-prosecution agreement with New York federal prosecutors.
American Express's legal challenges stem from allegations associated with their wire products, where customers reportedly received inaccurate tax guidance. Additionally, the company's credit card marketing tactics have come under scrutiny, leading to the resolution of the deceptive marketing claims.
The settlement with the DOJ comes in the wake of similar agreements by other major corporations, such as Mastercard and Block, who have also faced inquiries from prosecutors or regulators. These companies have settled their respective claims, reflecting a broader trend of increased regulatory oversight and enforcement actions against financial institutions.
In a statement, American Express announced its commitment to resolving these legal matters and moving forward.
"Pursuant to the agreements and after crediting, American Express will pay approximately $230 million in total to resolve these matters." – American Express
This payment underscores American Express's intention to comply with regulatory expectations and rectify past errors.