The Department of Justice on Thursday announced a $109 million settlement with American Express resolving allegations that the financial services giant deceptively marketed credit cards. Credit: BloombergAmex Latest Target as Regulators Scrutinize Whether Credit Card Issuers Deliver on Rewards Promises
“Issuers need to think about rewards programs with the same level of rigor as they do for things like interest rates and fees. That means ensuring marketing claims are accurate, redemption processes are clear, and systems are in place to handle technical issues," said A.J. Dhaliwal, a partner at Sheppard Mullin.
January 17, 2025 at 03:30 PM
6 minute read
Rewards have become such a powerful driver of credit card sign-ups that some card issuers are succumbing to the temptation to overstate those perks, according to regulators, whose crackdown on the practice netted a big fish this week.
On Thursday, the Department of Justice announced that American Express has agreed to pay $109 million to settle allegations that it misrepresented the rewards and other terms of credit cards it aggressively marketed to small businesses from 2014-19. According to the Wall Street Journal, which first reported on the practices, the company about a decade ago escalated sales goals and offered hefty commissions to blunt the impact of Costco's decision to cancel an exclusive partnership with the credit card giant that had yielded it millions of small business customers.
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