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On January 16, 2025, the United States Department of Justice (DOJ) announced that it had reached a settlement with a credit card provider resolving allegations that the provider violated the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) through allegedly deceptive marketing of its credit card and wire transfer products, and by allegedly improper use of “dummy” Employer Identification Numbers (EIN). According to the DOJ, the provider violated the FIRREA by 1) making misrepresentations to prospective small business customers of its credit card product (through telemarketers) about the product’s fees and rewards, and whether credit checks would be performed without the customer’s consent, 2) entering “dummy” EINs for prospective small business customers of its credit card product and allowing those dummy EINs to remain on accounts for up to two years, in contravention of federal regulations requiring that the provider obtain EINs before approving applications, and 3) making misrepresentations to consumers concerning the provider’s wire transfer product’s purported tax benefits. As part of the settlement, the provider agreed to pay a civil money penalty to the DOJ in the amount of $108,700,000. The settlement agreement further provides that the provider can receive a $30.35 million credit toward the satisfaction of this civil penalty if it makes a full payment of the forfeiture and fine amounts due under a simultaneous non-prosecution agreement that it executed with the United States Attorney’s Office for the Eastern District of New York. |
