On January 16, 2025, the U.S. Department of Justice (DOJ) announced that it had entered into a settlement agreement with a bank holding company and global financial services corporation to resolve allegations that the Company violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) by “deceptively marketing credit card and wire transfer products and by entering ‘dummy’ Employer Identification Numbers in the credit card accounts of its affiliate bank.”
According to the DOJ, the Company misled small businesses by falsely representing card rewards and fees during sales calls to small businesses as well as by providing inaccurate financial information to potential customers. The DOJ alleged the Company misled federally insured financial institutions into approving credit card applications for certain small business customers without the required Employer Identification Numbers imposed on corporations and partnerships. The DOJ further alleged that the Company engaged in deceptive marketing of wire transfer products to small business customers by promoting false tax benefits.
As part of the settlement agreement, the Company agreed to pay a civil monetary penalty of $108.7 million. Contemporaneous with this agreement, the Company entered into a Non-Prosecution Agreement (NPA) with the U.S. Attorney’s Office for the Eastern District of New York in which the Office agreed not to criminally prosecute the Company or its employees for any violations of 18 U.S.C. §§ 1343 and 1349 occurring between April 1, 2018, and November 30, 2021. As part of the NPA, the Company agreed to pay a monetary penalty of $77,696,000 and forfeit $60,700,000. The Company also committed to cooperating with the Office and providing information for at least the 36-month term of the agreement.
If the Company makes a full payment of the forfeiture and fine amounts under the NPA, the Company will receive a $30.35 million credit toward the civil monetary penalty under the settlement agreement.
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