American Express To Pay $230 Million For Deceptive Sales Practises: Retail Turns Bearish
The United States accused the company of deceptive credit card marketing between 2014 and 2017 through an affiliated entity that initiated customer sales calls.
FollowAmerican Express (AXP) edged lower on Thursday after the payments firm agreed to pay $230 million to resolve investigations into certain sales practices.
The firm said it had reached agreements with the U.S. Department of Justice and reached an agreement in principle with the Staff of the Board of Governors of the Federal Reserve System to resolve previously disclosed investigations into historical sales practices for specific U.S. small business customers.
The United States accused the company of deceptive credit card marketing between 2014 and 2017 through an affiliated entity that initiated customer sales calls.
The alleged misconduct included misrepresenting the card rewards or fees and whether credit checks would be done without a customer’s consent and submitting falsified financial information for prospective customers, such as overstating a business’s income, the U.S. Justice Department said in a statement.
The U.S. also said that American Express allowed some small business customers to get credit cards without the required employer identification numbers.
“We cooperated extensively with these agencies and our regulators and took decisive voluntary action to address these issues, including discontinuing certain products several years ago,” the company said.
However, American Express had already taken into account the costs associated with the settlements in prior periods and said they would not impact the 2024 guidance.
Retail sentiment on Stocktwits tumbled to ‘bearish’ (41/100) from ‘extremely bullish’ (89/100) a day ago, while retail chatter jumped to ‘extremely high.’
AXP’s Sentiment Meter and Message Volume as of 02:19 p.m. ET on Jan. 16, 2025 | Source: Stocktwits
One user felt that the stock would crash below $100 in the near future.
The company is scheduled to report its fourth-quarter results on Jan. 24.
Over the past year, the stock has gained 72%.
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