Following an investigation into American Express Co’s foreign-exchange department, the company has suspended a director in the unit, the Wall Street Journal reported this Tuesday, citing sources familiar with the matter.
According to the sources, last month the department was informed of the suspension of director Taylor Simonin in the foreign exchange unit. Simonin was responsible for the oversight of account development staff who help foreign-exchange salespeople and aid customers with currency conversion, the sources said.
The suspension of Simonin is part of a wider investigation into the pricing practices of American Express’ foreign exchange international payments (FXIP) business. The company is being investigated by a number of federal agencies, including the US Department of Justice which issued subpoenas to the card issuer in late October.
American Express accused of manipulating currency-conversion rates
Back in July, the Wall Street Journal first reported that the forex unit at American Express would routinely increase currency-conversion rates, without alerting customers, from at least 2004 until early 2018.
Rob Frasca Talks Ndau as an Adaptive Store of ValueGo to article >>
As Finance Magnates reported, the article, which cited current and former employees at the company, said that AmEx used this tactic for more than ten years to increase revenue and employee commissions. In some instances, customers experienced margin increases between 0.05 to 0.25 of a percentage point towards the beginning of 2018. Before this, margins rose as much as three percentage points.
However, AmEx has said that it allows its customers to see the offered forex rates before they place the orders and that it gives its clients time to make a decision based on those rates.
The FXIP unit at American Express offers cross-border payment services. These are provided mostly to small and middle market business customers. The sector accounts for only a small slice of revenue, contributing less than one percent of AmEx’s total revenue.
According to a report from Reuters, overall, the firm does not expect the investigation to hurt the company. When asked for comment, a spokesperson for AmEx declined to speak on the matter, saying: “this is an ongoing review, we do not comment on any personnel issues, whether related to FXIP or not.”