Given AMEX’s recent wave of reviews and shutdowns of business credit cards, this was likely part of an internal account review after the penalties. If you have a card that was obtained using a similar fake EIN, it may be safer to close it proactively.

Overview

AMEX (American Express), headquartered in New York, has agreed to pay a civil penalty of $108,700,000 to resolve allegations that, from 2014 to 2017, it deceptively marketed credit card and wire transfer products and entered “fake” Employer Identification Numbers (EINs) into credit card accounts at its affiliated bank.

This agreement reflects a strong response from the U.S. Department of Justice. Brian M. Boynton, head of the DOJ’s Civil Division, said that when financial companies use deceptive sales tactics or falsify information to conceal noncompliance with applicable regulations, they threaten the integrity of our financial system.

Details of the Allegations

According to the U.S. allegations, AMEX engaged in deceptive marketing through sales calls to small businesses made by its affiliated entities. The alleged misconduct included misrepresenting credit card rewards and fees, as well as whether a credit check would be performed without the customer’s consent. It also included providing false financial information to mislead prospective customers, such as overstating business income.

In addition, AMEX was accused of allowing some small-business customers to obtain credit cards without the required Employer Identification Numbers, even though those EINs were legally required. In 2015 and the first half of 2016, AMEX employees used fake EINs such as “123456788” to open credit cards for those small-business customers. AMEX allegedly failed to take action to address the issue for as long as two years after it surfaced.

Fraud Involving Wire Transfer Products

From 2018 to 2021, AMEX improperly promoted wire transfer products called “Payroll Rewards” and “Premium Wise” to its small-business customers. False statements by sales staff led customers to believe these products carried tax advantages. In reality, the wire transfer fees charged by AMEX, which were above market averages, were not deductible business expenses, meaning customers did not receive the tax benefits that had been claimed.

Conclusion and Next Steps

Under a non-prosecution agreement with the U.S. Attorney’s Office for the Eastern District, AMEX must also pay certain criminal penalties and forfeiture amounts. The source text states that, as part of the civil and criminal resolution, AMEX may reduce its civil penalty by $30,350,000 under terms related to AMEX Wise, though the original wording here appears unclear. The resolution is intended to hold financial institutions accountable for maintaining customer trust and to prevent similar misconduct in the future.

As FDIC-OIG Special Agent Jeffrey D. Pittano said, this settlement responds to AMEX’s violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and serves as a reminder that financial companies must follow the law and avoid improper sales practices.

Overall, this settlement is not only about holding AMEX accountable, but also about protecting the healthy functioning of the financial market and creating a more transparent and fair business environment for consumers.