AMEX Committed Fraud And Got Caught (What This Means For You)
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Did American Express defraud their customers and the government? The IRS seems to think so. According to CNBC, quote, American Express is paying approximately $230 million to resolve a Department of Justice criminal wire fraud investigation and settle civil allegations of deceptive marketing, end quote.

I think that's enough quote for that one. So what sneaky illegal things are they accused of doing? And how does it affect you? We'll talk about it in today's video. But first, click those like and subscribe buttons and share this with everyone you know who does business with American Express because they might want to leave home without it. They're not calling me to do their ad reads, I'll tell you that much. You're not welcome here. Okay.

Here's the sitch. In 2018 and 2019, Amex launched two wire payment products, Payroll Rewards and Premium Wire, which they marketed as a way for small and mid-sized businesses to score some tax savings. Customers were told that the wire payment fees were fully tax deductible as a business expense. They also told their customers that the membership rewards points they got in exchange for transactions were earned tax-free and therefore, quote, "outweighed the true cost of the fees." But there was a huge, tiny problem with that.

Quote, American Express misled their customers by touting tax breaks that simply didn't exist. And that's according to the IRS's New York Criminal Investigation Division, a.k.a. IRS NYCID, this fall on CBS. Anyway, according to prosecutors, quote, incurring a wiring fee far in excess of that offered by competitors in the marketplace for the purpose of generating a personal benefit is not an ordinary and necessary business expense, which means those tax deductions were a no-go.

It's kind of like if Chipotle charged you triple for guac and then justified it by telling you guac was tax deductible and came with some kind of membership rewards. Amex's own internal investigation in 2021 led to 200 employees getting the boot. And by November of that year, these products were discontinued faster than Law & Order, IRS, NYCID would if it were a real show. But screwing over small businesses with misleading tax advice is just one part of this costly fiasco. The second part has to do with deceptive credit card marketing.

specifically to, you guessed it, small businesses. The shady behavior in question occurred between 2014 and 2017. While the Brits were voting to Brexit and the rest of us were doing the ice bucket challenge, Amex was allegedly marketing credit cards by misrepresenting the rewards or fees and, get this, quote, submitting falsified financial information for prospective customers, such as overstating a business's income.

The US alleged that Amex employees even let businesses open cards with fake employer identification numbers like 1, 2, 3, 4, 5, 6, 7, 8, 9. Real creative, guys. Also. Siri, remind me to change my password.

Unrelated. Sure, Jan. The DOJ also called out Amex for violating the trust placed in financial institutions. Brian Boynton, head of the DOJ Civil Division, said, quote, When financial companies engage in deceptive sales tactics or falsify information to cover up a failure to follow applicable regulations, they threaten the integrity of our financial system. Well said, Brian. It's exactly what I was going to say. He really said, I'm not mad. I'm just disappointed.

Now, MX is not admitting any wrongdoing here, but one thing is clear. They're paying for their mistakes that they apparently didn't make. Oh.

All in all, the bill to make all these legal troubles go away comes out to around $230 million. And frankly, I'm not surprised to see a credit card company accused of fattening their own pockets at the expense of small business owners, especially Amex. They already charge businesses the highest swipe fees in the industry. The interchange rates from Visa, MasterCard, and Discover range anywhere from 1.5% to 2.5%. But American Express can go up to 3.5%.

Amex, your swipe fees. Woof. You knew there was going to be a Home Alone reference. How was I supposed to know? So, I would think twice about anything these guys are selling me. And this definitely is not the first time credit card companies have gotten their hands slapped for some unsavory behavior. The Consumer Financial Protection Bureau has taken several actions against illegal conduct by credit card companies.

Here's another one. And.

and ordering Citibank to pay $25.9 million for intentional illegal discrimination against credit card applicants the bank identified as Armenian-American. Do those sound like companies you want to do business with? Is that what you want in your wallet? No, no, no, no, no, no, no, no, no, no. Didn't think so. Plus, there's another huge example of just how scummy and gross these companies can be.

But before we get to that, I want to tell you how you can keep your personal info away from other shady people like spammers and scammers. And that's by using Delete.me, a sponsor of today's video. Delete.me finds and removes your info from hundreds of data broker sites that go and sell it for a profit. They'll even send you a report showing you where they found and removed your data and how much time they've saved you. And they've saved me 77 hours already, which is more time I can spend writing fan fiction based on law and order, IRS, NYC, ID.

So help protect yourself from the risks of online scams and data breaches with Delete.me. And right now, you can get 20% off by going to joindeleteme.com slash george or click the link in the description. And while you're down there in the description, you'll see another sponsor of today's episode, Tello. Tello has crazy affordable phone plans that get you the same reliable coverage and features as the big guys, but with pricing as low as $5 a month.

And if you want to never worry about data limits like me, the unlimited everything plan is just 25 bucks a month. And here's the cool part. There's no contract. You can upgrade or downgrade whenever you want. And you can do all of this from the comfort of your own home. And if you want to save even more, you'll get an extra five bucks off your first month of the unlimited plan by going to tello.com slash George or use the link in the description below. That's tello.com slash George. Okay, back to the shady credit card companies.

Another example of their general scumminess is the way their rewards programs work. Credit card companies run thousands of experiments on consumers every year to get them to chase the carrot of rewards through more spending. And they are experts in consumer behavior. An ex Capital One manager told me that these rewards programs are intentionally created not to bless you, but to screw you over and get you addicted

to the measly rewards. And you think you're winning because you have thousands of points, but they can devalue those points at any time. So when you go to redeem them, you might think, oh my gosh, I'm getting a steak dinner tonight. But instead, you get a sausage biscuit at Bojangles if you're lucky. And you should be so lucky. No slander on Bojangles in this house. These biscuits, ah!

Hey, God, I love you. And aside from the spending more to get rewards problem, there's an even bigger issue with the whole reward system itself. Recently, the Fed conducted a study to determine who pays for these credit card rewards. And what they found was more repulsive than the mystery liquid on the bathroom floor at IHOP. Please, God, be syrup. Please be syrup. Think it's the same thing they use to wipe down the tables? Why is everything sticky? It can't all be syrup. I'm watching you, IHOP.

Here's a direct quote from the Fed. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities. What they're basically saying is credit card rewards programs are like Robin Hood in reverse, robbing the poor to pay the rich. So if you've got credit cards in your wallet, it's worth asking yourself, is this the kind of system I want to be a part of and benefit from? Is this the game I really want to play for the rest of my life?

Do I want this kind of poison in my financial waters? Now, I don't know about you, but I'd rather not be a part of this predatory system. And I know some of you are like, okay, George, what are we supposed to do? Just not use credit cards? Yeah, that's exactly what you should do. Well, I did not see that coming. Look, I know credit cards are so baked into how our society operates, it might seem like it's impossible to not use them. But the truth is, you do have a choice. You can opt out of the system simply by using cash and a debit card.

And if you're worried about your credit score, wake up, bro. I've already shown you on this channel how you can get an apartment, rent a car, and even buy a house without a credit score. So choose a life without debt, even if you pay it off every month. Not only is it possible, it's so much better. And if you have credit card debt, get it paid off ASAP and never look back. I did, and it was one of the best decisions of my life.

of my life, along with marrying my wife and buying an LED toilet nightlight. Both equally great decisions. Link in bio. Not to my wife, just to the toilet nightlight. Thank you for clarifying. Once I cut up my credit card, I weirdly built wealth faster with more confidence and peace. And I'm willing to bet you'll experience the same exact thing.

Now, if you're not ready to pull out the scissors quite yet, that's fine. But at least try my no credit card challenge. Here's how it works. Step number one, stick your credit cards in a block of ice or lock them away somewhere you'll never see or think about them. Delete your credit card info from apps and sites you use regularly, especially Timu. Maybe we should stop shopping like a billionaire.

Number two, for the next 30 days, stick to using a debit card or cash for all purchases. Step number three, track your spending with a budgeting tool. I highly recommend and personally use one called EveryDollar, and you can check it out for free using the link in the description below. And step number four, after 30 days, compare the numbers from your previous credit card days and see if you spent less or more intentional, got closer to your financial goals, and felt more in control and aware of your money. And I won't be surprised if you end up cutting the cards and never looking back.

But again, I'm just inviting you to try it. I'm sure Amex will always welcome you back in their money-grubbing arms when they're done paying $230 million in fines. So let me know in the comments if you're committing to the challenge, and I promise to reply to each of you that commit as a thank you.

And no matter what your financial situation looks like, you got to watch out for financial traps designed to benefit shady companies and keep you broke. If you want to know more about these traps and how to avoid them, you got to check out my book, Breaking Free From Broke, especially the audiobook version, which I read myself with some really cool sound design and custom music.

for yours truly. It's going to help you avoid these traps and build wealth, peace, and confidence. I'll drop a link to the audiobook in the description below. And speaking of shady companies, keep watching this next video to see a predatory lender get called out for preying on low-income families. I'll drop a link to that in the description as well. Thanks for watching. We'll see you next time.