A report from the Wall Street Journal this Thursday suggests that American Express (AmEx), a financial services firm best known for its credit cards, is under investigation by the Federal Bureau of Investigation (FBI).
The alleged probe is due to supposed malpractice in AmEx’s foreign exchange (FX) division. Thursday’s report suggests that AmEx lied about its prices in order to attract clients. Once those clients had signed up for AmEx’s services, it raised its prices without warning.
According to the Wall Street Journal, the FBI – an organisation many of you will remember from the film Rush Hour – is gathering facts on the case. The same article claims that the FBI has communicated with AmEx and is waiting for the firm to answer a list of questions.
American Express Rip Off
Perhaps the only positive of the case for AmEx is the size of their FX division. The firm’s FX business mostly serves small and medium-sized businesses and the division only generates half a percent of AmEx revenues.
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This week’s allegations follow another report, also by the Wall Street Journal, released in July. That article claimed that AmEx employees regularly increased conversion rates, without informing clients, to increase revenue and commissions.
The paper also claimed that sales representatives were instructed by management to be deliberately vague when discussing payments. They were also told to avoid putting prices in writing.
That same report said that AmEx employees would claim that they could provide the best prices for currency conversion or overseas transfers. They would then increase margin fees, a charge incurred on top of a spread, without telling customers.
According to the Wall Street Journal, this procedure had been going on for years. Current and former employees of AmEx said that the practice had been going on since 2004.
How the FBI’s case will proceed remains unclear. AmEx better just hope that Lee and Carter aren’t on the case.