American Express is refunding some of its small business foreign exchange (forex) clients following an investigation into claims that the company misrepresented foreign currency conversion rates.
The Wall Street Journal reported recently that American Express is allocating a combined $1.6 million to refund nearly 200 small business customers following an internal investigation into claims that first surfaced last year.
Unnamed sources spoke with the Wall Street Journal in 2018 accusing American Express of enticing business clients by offering low currency conversion rates, then quietly raising those rates at a later time by increasing the margin of fees American Express adds on to the base exchange rate without notifying clients. According to the sources, the company had been practicing this for more than a decade and continued until early 2018.
At the time, American Express told reporters that there are no pricing contracts in-place for most of its agreements with forex customers.
Small and medium-sized business customers were the focus of the alleged forex rate manipulation, reports said at the time.
Now, American Express has reportedly initiated refunds to impacted small business clients, fired 10 of its staff members and begun retraining 28 other employees within its foreign exchange international payments department.
The Department of Justice, Consumer Financial Protection Bureau and the Federal Reserve have all launched their own probes into the matter, the WSJ said this week.
While the payments company said an internal review found no systematic misconduct, nor any management-driven sales practices, American Express said it discovered “some colleagues did not properly present our pricing” when reaching out to potential new customers or speaking with existing cardholders.
The small business cardholders receiving refunds represent about 1 percent of the company’s total forex clients between 2013 and 2018, according to reports.
American Express’s forex division itself accounts for less than 0.5 percent of the company’s revenues, reports added, and is separate from the firm’s main credit and charge card operations.