Officials at the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC) and the Treasury Department are looking to see if American Express Co. (AmEx) harnessed strong and deceptive sales practices for card sales to business owners and if clients experienced negative effects, The Wall Street Journal reported Thursday (Jan. 7), citing unnamed sources.
The paper reported that the Office of the Comptroller of the Currency (OCC) is looking into business card sales tactics at the company as well, citing unnamed sources.
A representative for AmEx told WSJ, “We have robust compliance policies and controls in place, and do not tolerate misconduct.” The representative noted that the company has been “cooperating with a regulatory review of small business card sales between 2015 and 2016” as of the spring of 2020, according to the paper.
“We have conducted a detailed, independent review of these sales from this time period and found no evidence of a pattern of misleading sales practices,” the representative said, noting that the company will keep working with its regulators.
Representatives of the Fed, FDIC and Treasury inspectors general offices would not comment on the matter, the paper reported.
The probe by the OCC has to do with cards provided to business owners to supplant their co-branded AmEx-Costco cards, according to unnamed sources in the paper’s report. A representative for the OCC would not comment on the matter, WSJ reported.
In 2015, Costco Wholesale Corp. opted to conclude its collaboration with AmEx, and AmEx mounted a strong effort to retain those clients, WSJ reported.
Small- to medium-sized businesses (SMBs) were allegedly misled by salespeople from AmEx who were said to have misrepresented card rewards and charges to get more approvals, according to a Wall Street Journal report in March 2020.
“We have rigorous, multilayered monitoring and independent risk-management processes in place, which we continuously review and enhance to ensure that all sales activities conform with our values, internal policies and regulatory requirements,” a representative said at the time said, as per WSJ. “We carefully examine any issues raised through our various internal and external feedback channels and audits, and we do not tolerate any misconduct.”