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The Office of the Comptroller of the Currency (OCC) American Express $15m alleging the card network failed to oversee a third-party affiliate.
Amex 鈥渞ecklessly engaged in unsafe or unsound practices鈥 and its 鈥減ractices were part of a pattern of misconduct鈥, the regulator said in an accompanying .
Between 2015 and 2017, Amex failed to properly govern and oversee the efforts of a third-party affiliate, including call monitoring and documentation processes, and its tracking and monitoring of customer complaints.
Although the OCC document does not name the affiliate, Amex鈥檚 spokesperson has confirmed to VIXIO it is Travel Related Services Company (TRS), Amex鈥檚 principal operating subsidiary.
The OCC also alleged that Amex failed to gather employer identification numbers for certain small business customers and properly maintain records regarding compliance with customer identification regulations during the same period.
Finally, Amex did not keep records related to its effort to retain small business customers and, later, could not fetch them in response to the regulator鈥檚 requests.
According to the OCC, these practices were part of large-scale efforts by Amex to retain small business customers.
Small businesses, along with Millennial and Gen Z consumers, have been a key part of Amex鈥檚 recent efforts to broaden the appeal of its products to attract new customers.
The success of this strategy is reflected in the fact that US small and medium-sized businesses (SMEs) 25 percent of Amex鈥檚 network volume growth in the last quarter and SMEs now account for 83 percent of its billed commercial customers.
Amex neither admitted nor denied the OCC allegations, the order says.
According to the company鈥檚 spokesperson, these matters 鈥渉ave been fully addressed, including updating card sales policies, enhancing training for sales employees, and providing customer remediation as appropriate鈥.
The OCC is the banking regulator of national banks in the US. As a US national bank chartered by the OCC, Amex is subject to the OCC鈥檚 examination exercise.
The spokesperson said Amex had fully reserved for the penalty in a prior period.
In addition to the OCC investigation, Amex is under scrutiny by the Department of Justice (DOJ) and the US Attorney鈥檚 Office for the Eastern District of New York (EDNY), the company鈥檚 shows.
Amex has received a grand jury subpoena from the US Attorney which also involved its historical sales practices relating to small business customers.
Past matters with US regulators
This is not the first time Amex has got into the crosshairs with regulators over failure to properly handle its third-party relationship with TRS.
In 2012, Amex agreed to pay a combined $27.5m fine and $85m in restitution to settle cases with the , the (Fed), the (FDIC) and the (CFPB).
In that case, the regulators alleged the debt collection practices of TRS were deceptive and Amex failed to properly manage its vendor relationship.
Last July, Amex in breach of US Kingpin sanctions and was handed a $430,500 fine.
The Treasury alleged Amex processed $155,190 worth of transactions for an account whose supplemental card holder was designated in connection with illegal drug distribution and money laundering.
