American Express is under investigation. Its salespeople say they’re being made to take the fall.

In May of last year, American Express changed their compensation plan, causing hundreds of reps to lose hundreds of thousands of dollars in commissions. On top of that, 150 of those employees were fired with very little or no explanation.

Adam Isserlis, an Amex spokesman, told Business Insider that “These changes were designed to serve our customers more effectively, and better leverage American Express' digital marketing capabilities to position the business for growth."

This, on top of previous layoffs at the company, made salespeople feel like they were the scapegoats for recent investigations into Amex’s small business practices, conducted by the Office of the Comptroller of the Currency, the civil division of the Justice Department, and federal prosecutors in Brooklyn.

Given that as recently as 2021 the sales team brought in roughly 30% of the company's total revenue, perhaps these feelings are justified. That same year, a former Amex employee claimed in a legal filing that salespeople were pressured to sell a product that occupied a legal gray area. This product gave small-business owners personal credit card rewards points in exchange for paying employee expenses with business income. Amex portrayed the salespeople who pushed the product as rogue actors.

Now that most of the sales team leaders have been fired or left Amex, the question is: how high up the corporate ladder did knowledge about the dubious legality of this product go?

To answer that, we have to go back to 2018, when Amex launched a product called Premium Wire. This product was intended to incentivize business owners to charge their payroll – usually their biggest expense – to their credit cards, giving Amex a cut of every dollar that routed through its systems. This would conceivably result in billions of additional dollars in revenue for Amex.

Business owners, meanwhile, were told that the fees they paid Amex for this service could be turned into reward points – one point per dollar wired. But the points earned on these transactions still didn’t outweigh the costs of the wires, and so only “points junkies” were interested in the product, one former salesperson told Business Insider. Additionally, some salespeople questioned the legality of the product in the first place, so they weren’t making selling it a priority. Others were focused on card volume because it earned them more commission credits than dollars wired.

Then, in 2019, Amex announced that Premium Wire would be compensated at the same level as card volume, and the sales teams’ attitude changed. Trainings all over the country — both at the regional and national level — gave salespeople advice for selling the product. One such training presentation viewed by Insider told team members to pitch the program as a way customers could use a tax loophole to enrich themselves. Business owners would pay fees on large transactions, but they could deduct a percentage of that fee as a business expense, and then they could turn every single point into cash.

Now salespeople had a reason to sell, and business owners had a reason to buy. "You were on a bad list if you didn't sell it," one person told Insider. "They were pushing it as an agenda."

When it came to the legality of the product, most salespeople at Amex trusted that their bosses were doing everything by the book. But in 2002 guidance, the IRS specifically said that while frequent-flier rewards earned on business could be used personally, that rule "does not apply to travel or other promotional benefits that are converted to cash."

According to an internal presentation, Amex booked at least $1.2 billion in Premium Wire volume by the end of 2019. And when the pandemic hit and credit card spending decreased significantly, senior leadership agreed to shift their focus towards Premium Wire. Salespeople were encouraged to sell as much of the product as they could before December 31, 2020. But in early 2021, Amex’s compliance officers started holding secret meetings in which they questioned employees about emails they had been sending to customers about Premium Wire. They then started firing salespeople, citing the inappropriate tactics they had used to sell Premium Wire to customers.

Thomas Zoerner was one such person fired in that first wave. He filed a wage claim with the California Labor Commissioner, a claim that Amex attempted to extinguish by petitioning the California Supreme Court. At the time he was fired, Zoerner was allegedly owed $42,326 in commissions by Amex.

"Amex's senior executives were responsible for the development and implementation of the specific features of the Payroll Rewards and the Premium Wire Services Programs, which were marketed as tax write-off vehicles," Zoerner’s claim stated. "Salespersons, such as I, were trained by management on how to sell the product and were pressured to encourage clients to wire funds, earn membership rewards points, and then convert the points to cash via a Charles Schwab account.” Zoerner's case has since been closed, according to the court's clerk.

Amex maintains that it’s the salespeople themselves, not the leadership, who are at fault.

"As we stated in 2021, we discovered through internal channels that some members of a group within our SME sales organization failed to uphold our values and had positioned certain products inappropriately, specifically with respect to tax benefits," Adam Isserlis said in a statement. "The product has since been discontinued. After conducting an internal investigation, we terminated employees that engaged in misconduct and enhanced our policies and controls to prevent the issue from recurring."

Amex required the salespeople it was firing to give up all claims against the company in exchange for severance. And those who offered their resignation were told to leave that same day.

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