Small- to medium-sized businesses (SMBs) were duped by salespeople from American Express (AmEx) who reportedly misrepresented card rewards and fees in an effort to close more approvals, according to a report from The Wall Street Journal (WSJ) Sunday (March 1).
Some AmEx salespeople allegedly “strong-armed” SMB owners to apply for cards, said 12-plus current and former AmEx employees. Aside from misrepresenting card rewards and fees, some salespeople reportedly pulled people’s credit reports without consent or issued cards that weren’t requested.
“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,” the spokesman said. “We carefully examine any issues raised through our various internal and external feedback channels and audits, and we do not tolerate any misconduct.”
The AmEx spokesman said the company discovered a few cases “inconsistent with our sales policies.”
“All of those instances were promptly and appropriately addressed with our customers, as necessary, and with our employees, including through disciplinary action,” he said.
The employees said the tactics started no later than 2015, at a time when AmEx was working to hang on to Costco’s small-business customers after AmEx and Costco parted ways.
The partnership’s end was a setback to AmEx, which had Costco’s total credit card market for 16 years and also issued co-branded cards that gave members special perks. Customers could also use their Costco-branded cards at other merchants.
Kenneth Chenault, then AmEx’s CEO, said roughly 70 percent of spending on the Costco cards were non-Costco purchases. The end of the partnership would have ended those fees, too.
AmEx “launched an aggressive campaign to keep them,” and that move sparked a change in the way card sales were conducted, focusing on goals and commissions.
About 30 percent of AmEx’s revenue comes from the services it sells to businesses of all sizes. It is the biggest U.S. business-card issuer, said the Nilson Report. AmEx has said that its suite of SMB members is larger than that of its nearest five competitors combined.
"American Express has a deep, long-standing commitment to maintaining our customers’ trust, and we take their feedback seriously. We have rigorous, multi-layered 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. We carefully examine any issues raised through our various internal and external feedback channels and audits, and we do not tolerate any misconduct," AmEx said in a statement emailed to PYMNTS.com.
The spokesperson went on to say that the telesales group "is one of our multiple sales channels for U.S. small business cards." The group was responsible for approximately 0.25 percent of the 65 million total new cards between 2014 and 2019.
"Our priority is to deliver on all of our commitments to our customers and to ensure the highest levels of integrity, regulatory compliance and operational standards at every level of the organization," the spokesperson said.
In October, American Express launched a suite of new commercial card products targeted at startups and entrepreneurs. The offering would not require them to offer a personal guarantee or security deposit. Dubbed the Corporate Program for Startups, the new cards will integrate with a range of services to support expense management while offering startups “dynamic” spending capacity that adjusts based on a company’s bank account.