American Express agrees to pay more than $138 million to resolve sales and marketing investigation

NEW YORK (AP) — American Express has agreed to pay more than $138 million to resolve a wire fraud investigation related to its sales and marketing practices, federal authorities announced Thursday.

The New York-based financial giant provided inaccurate tax advice to current and prospective customers on electronic products primarily marketed to small and medium-sized businesses, the U.S. Attorney’s Office for the Eastern District of New York said. Clients were told, for example, that the firm’s fees were tax deductible as business expenses.

Harry Chavis, a special agent in charge of the Internal Revenue Service’s New York office, said the company “misled its customers by touting tax breaks that simply did not exist.”

Authorities said an internal investigation led to the firing of about 200 employees in 2021 and that the company discontinued the products altogether later that year.

“Financial institutions like American Express do not have to come up with inaccurate tax avoidance schemes to sell products and make quick profits,” said Judy Philips, Acting United States Attorney for the Eastern District of New York. , in a press release. “This resolution ensures that American Express will be held financially responsible for the unacceptable conduct of its sellers who misrepresented the tax benefits of these products.”

American Express said the disputed sales practices ended in 2021 or earlier and that it would pay a total of about $230 million to resolve the issue.

“We have cooperated extensively with these agencies and our regulators and have taken decisive voluntary action to address these issues, including discontinuing certain products several years ago, conducting a comprehensive internal review, taking appropriate disciplinary action, organizational changes and improving policies, compliance and training programs,” the company said in a statement.

Under the terms of the agreement, American Express will pay a criminal fine of $77.7 million and forfeit $60.7 million, representing net income attributed to sales of the wireline products, according to the U.S. Attorney’s Office .

The company also separately reached a multimillion-dollar civil settlement with the U.S. Department of Justice.

__

This story has been corrected to show that Philips is the office’s acting attorney and not the acting U.S. attorney.