Several federal agencies responsible for various aspects of financial industry regulation are currently investigating American Express (NYSE:AXP) over alleged misconduct regarding its corporate payment cards.
According to an article published on Thursday by The Wall Street Journal and citing "people familiar with the matter," the inspectors general offices of the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Treasury Department, in addition to the Office of the Controller of the Currency, are probing the matter.
The investigations concern allegations that American Express used what the newspaper characterized as "false and misleading sales tactics" to convince business owners to obtain such cards. The agencies are also looking into how and if customers were harmed through these activities.
The report comes nearly a year after the Journal published an article in which over one dozen unnamed current and former American Express employees provided details of alleged malfeasance. One client, small business owner Bryan Daughtry, claimed that he had been pressured to apply for a card.
Responding to those allegations at the time, an unnamed American Express spokesman told the Journal that it was aware of some instances where this occurred. The number of these cases that were "inconsistent with our sales policies" was small, he claimed.
"We carefully examine any issues raised through our various internal and external feedback channels and audits, and we do not tolerate any misconduct," he added.
According to the earlier article's sources, the conduct of the more aggressive salespeople stemmed from Costco Wholesale's 2015 decision to abandon American Express as the exclusive credit card brand accepted at its stores. This loss, plus that of the Costco card co-branded with American Express, put a substantial dent in the latter's business.
American Express has not yet responded to the new report of the federal investigations.