The FBI has launched a probe into forex pricing practices inside American Express Co.’s foreign-exchange unit, the WSJ reports. The investigation, which is in its early stages, is being run out of the FBI’s Washington field office and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business.
The FBI began its investigation in August and followed a previous report from the WSJ that AmEx’s foreign-exchange unit had recruited business clients with offers of low currency-conversion rates before raising prices without warning.
An AmEx spokeswoman declined to comment on the FBI investigation. In July, Amex said it took the allegations very seriously and would conduct a review. The unit’s employees have been instructed to avoid deleting emails, people familiar with the instructions said.
For now, the FBI is in the fact-gathering stage of the investigation, and is communicating with AmEx and is waiting for the company to answer a list of questions.
Separately, the WSJ also notes that the Office of the Comptroller of the Currency also is looking into how AmEx disclosed pricing to customers, including what the customers were told about potential rate increases and who knew about the practice within the company.
At the end of July, the WSJ first reported that AmEx’s foreign-exchange international payments department routinely increased conversion rates without notifying customers, to boost revenue and employee commissions. The practice occurred until early this year and dated back to at least 2004.
The good news for Amex is that its forex business, which largely serves small and midsize businesses, accounts for less than half of a percentage point of the company’s total revenue.
Still, news of the probe sent its stock sliding, with AXP dropping to session lows, down as much as 2% on the report.
