SPY295.44+0.56 0.19%
DIA244.88-0.14 -0.06%
IXIC9,324.59+39.71 0.43%

American Express Employees Boosted Card Sales By Misleading, Coercing Business Owners: Report

The American Express Company (NYSE: AXP) employees used illegal tactics on small business owners to boost card sales, the Wall Street Journal reported Sunday.

Benzinga · 03/02/2020 04:49

The American Express Company (NYSE: AXP) employees used illegal tactics on small business owners to boost card sales, the Wall Street Journal reported Sunday.

What Happened

The salesperson gave false information about the associated annual fees and rewards to the clients to get them to sign up for the cards, according to the Journal. The employees also checked credit card reports without the client's consent.

Ohio-based Bryan Daughtry, an owner of a disaster-cleanup company, told the Journal that an AmEx saleswoman checked his credit score in front of him, even as he expressed his apprehension.

Daughtry's application was approved, and he received a $250 as an annual fee for the card. When he threatened to take action claiming he never consented for the card in the first place, AmEx dropped the charge.

AmEx employees told the Journal that Daughtry's case was just one among many.

When Costco Wholesale Corporation (NASDAQ: COST) dropped its exclusive partnership, employees came under intense pressure to boost sales and were offered bigger than usual rewards in return.

The practice that reportedly started in the Phoenix office was later spotted by senior sales officials in Florida as well, the Journal reported.

Businesses account for about 30% of AmEx's revenue. A company spokesperson told the Journal that the sales representatives account for about 0.25% of all card sales it made between 2014 and 2019. "Less than 0.25% of the group's sales activities have been identified by us as inconsistent with our sales policies," the spokesperson said.

Why It Matters

This isn't the first time that a major financial services company's employees were found to be acting against the customers' interest.

Wells Fargo & Company (NYSE: WFC) continues to reel from a scandal uncovered in 2016, where employees were opening fake accounts to boost sales numbers under pressure from the management.

The banking giant was ordered to pay $35 million by the United States Securities and Exchange Commission in another case on charges of recommending high-risk investments to vulnerable clients.

Price Action

AmEx's shares closed 2.55% lower at $109.93 on Friday and inched slightly higher at $110.8 in the after-hours market.