American Express, Wire Fraud, New York 2024

Financial institutions like American Express have no business pitching inaccurate tax avoidance schemes to sell products and turn a quick profit, stated Acting Attorney for the United States Judy Philips.

“This resolution ensures that American Express will be held financially accountable for the unacceptable conduct of its sales employees in misrepresenting the tax benefits of these products,” she added.

Ms. Philips expressed her appreciation to the Federal Reserve Board of Governors for their work on the case.

“American Express misled their customers by touting tax breaks that simply didn’t exist. This deceitful marketing campaign that involved hundreds of employees defrauding their customers and the government, resulted in AMEX paying more than $138 million to cover their deceit,” stated IRS-CI New York Special Agent in Charge Harry T. Chavis, Jr.

The Improper Sales and Marketing of PR/PW

In approximately April 2018, American Express launched “Payroll Rewards,” a wire product that allowed business customers to pay their payroll via a direct payment from an AMEX account. AMEX charged a percentage-based fee—ranging from 1.77% to 3.5%—based on the size of the wire, even though, at the time, competitors offered wiring services for nominal fees of $0 to $50, irrespective of the size of the wire.

AMEX agreed to pay a criminal fine of $77,696,000 and forfeit a total of $60,700,000. The company has also entered a civil settlement with the Civil Division Fraud Section, for which it has agreed to pay a $60,700,000 civil penalty. The Office and Civil Frauds have each agreed to credit approximately $30,350,000 of the forfeiture amount and civil fine to their respective resolutions.

“Regardless of a company’s size, every business is required to comply with the laws of this nation, including all tax laws,” stated IRS-CI New York Special Agent in Charge Chavis.

Under the terms of the non-prosecution agreement, American Express is required to continue to cooperate with and provide information to the Office for at least the 36-month term of the agreement. In the event that American Express violates the non-prosecution agreement, the Office may prosecute the company for any of the conduct that gave rise to the agreement and any newly discovered criminal activity.

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