US Federal investigation relates to 2021 Amex employee claim that salespeople were pressured to sell a product that gave SME owners personal credit card rewards points in exchange for paying employee expenses with business income.
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GLOAmerican Express is currently confronting considerable challenges. On one side the company is still recovering after a major restructuring of its renowned sales team’s compensation, which resulted in substantial commission reductions and layoffs. Simultaneously, American Express is the subject of ongoing investigations by various entities, such as the Office of the Comptroller of the Currency, the civil division of the Justice Department, and federal prosecutors in Brooklyn, examining Amex’s practices related to small businesses preactices.
In 2021, a former Amex employee claimed that salespeople were under pressure to promote an SME product operating in a legal gray area. This product allowed small and medium-sized enterprise (SME) owners to receive personal credit card rewards points by using business income for employee expenses. Despite Amex asserting that the practice was driven by rogue salespeople, the controversy originated in 2018 when Amex introduced Premium Wire. This initiative encouraged business owners to charge their payroll to credit cards, with the added incentive of using the points for personal or business travel or converting them into cash as a “personal tax-free benefit.”
Despite assurances to business owners that fees paid to Amex could be converted into reward points, former salespeople highlighted the impracticality of this proposition. Skepticism about the product’s legality grew, leading sales teams to shift their focus from Premium Wire to card volume.
In 2019, Amex adjusted Premium Wire’s compensation to align with card volume, prompting a change in sales teams’ approach. Training sessions encouraged presenting the program as a way for customers to exploit a tax loophole, resulting in increased sales and salespeople feeling pressured to promote the product.
Despite salespeople trusting that their superiors adhered to legal guidelines, an internal presentation revealed that Amex booked over $1.2 billion in Premium Wire volume by the end of 2019. Amid decreased credit card spending during the pandemic, senior leadership prioritized Premium Wire. Compliance officers initiated secret meetings in early 2021 to scrutinize salespeople’s emails related to Premium Wire, leading to firings for alleged inappropriate tactics.
One terminated employee, Thomas Zoerner, filed a wage claim against Amex, asserting that senior executives were responsible for the development and marketing of Premium Wire. Amex countered, attributing misconduct to the salespeople, not the leadership. The company mandated that terminated salespeople relinquish all claims against it in exchange for severance, and those resigning were instructed to leave on the same day.
American Express spokesman stated that the company is fully cooperating with the investigators.
