Sales Scandal: Amex Sales Reps get Jipped

why you should question the product your selling

Happy National Free Slurpee Day! We wouldn’t be a good friend if we didn’t remind you to hit your nearest 7-11 and grab a free Slurpee today.

In today’s Follow Up:

  • Wild Sales Story: Missing commission at Amex 🎤 

  • Sales in the news 🗞️

  • Sales tools 🛠️

  • Sales jobs for closers 💰

Sales Fact of The Day

52% of buyers are more likely to purchase from sellers after reading their content.

Sales Scandal: American Express Goes Rogue

Today we’re bringing the juice.

We gotta story that brings together The Wolf of Wall Street, The Apprentice, and Glengarry Glen Ross.

In May of 2022, 250 salespeople at American Express learned they weren’t going to get paid their commissions. Some sales reps lost out on hundreds of thousands of hard-earned dollars and over 150 were fired without explanation.

You know, there are some things you just never do in life.

You don’t touch a hot pan, you don’t tell your partner they look fat, and you don’t mess with a salesperson’s commission.

But that’s not the full story.

It all started in 2018 when Amex started pushing a new product for their business customers.

The goal of the product was to get businesses to charge more expenses to their credit cards to boost American Express transaction volume.

Here’s how it worked:

  • Sales reps told their customers to use their Amex credit cards to cover payroll.

  • Customers paid a fee (1.77% to 3.49%) to charge the payroll to their Amex, but in exchange, they could write the fee off as a business expense.

  • Amex got mass amounts of credit card transactions 📈 

  • Customers got points they could use on personal expenses. 💳️ 

For example

Let’s say Charlie’s Lemonade Stand pays out $1M / year to his employees on payroll.

Instead of paying the $1M with company cash, Charlie charges the $1 million to his Amex card, which earns him 1 million Amex points.

Charlie can now use those points on any personal expense, tax-free.

Now… to do this, Charlie had to pay a 1.7% fee aka $17,700 to Amex.

But Charlie’s Amex sales rep reminded him that he could deduct that as a business expense (at a ~35% tax rate), bringing the fee closer to $11K.

The product initially had a slow start, but that changed in 2019 when senior sales leaders changed the commission structure to incentivize reps to push it.

More customers using credit cards for payroll = more commission for sales reps.

For many years, Amex salespeople made a fortune on this product, because they were instructed to pitch it to their customers as a tax-saving product.

By the end of 2019, Amex booked at least $1.2 billion in payroll transactions, and sales reps were raking in over 7 figures.

Now, you might be thinking: is this even legal?

And the answer is…kinda. 

This product worked in a grey area that took advantage of a 2002 document from the IRS that said they don't mind if you use credit card points earned from business expenses for personal use.

But in a 2022 SEC filing, Amex disclosed that federal prosecutors in Brooklyn were investigating its sales practices.

In a legal filing, a former sales rep said they were pressured to sell the product as a “tax write-off vehicle." AND THAT is a big no-no ☝️.

Meanwhile, Amex's leadership stated that the push to sell this as a “tax write-off vehicle” was just the work “of a rogue band of employees acting outside the bounds of company policies”.

If this were an iMessage, it might go something like this:

Amex leadership: Yo, we have this new product and we need you to push it. Sell it as a “tax write-off” 😉 .

Sales reps: No problem. What’s the commish lookin like?

Amex leadership: The highest commission you’ve ever seen 😄 .

Sales reps: Consider it done…And you said we should sell this as a “tax-write off”, right?

Amex leadership: Never said that.

Sales reps: But… 🤔 

Amex leadership: We’re actually going to move you to a new role.

Sales reps: Ok, what about my commission from last quarter?

Amex leadership: What commission?

Just as fast as Amex built up their top sales reps and billion-dollar brainchild, they shot it down. By 2021, Amex management decided to shut it down and investigate their own people.

This left many sales reps with new roles, missing commission, and some even received payouts to leave the company and not talk about the situation.

What can we learn from this?

If something seems too good to be true, it usually is.

There is a lot of pressure in sales, and sometimes it’s hard to tell the difference between an aggressive sales strategy and something that’s unethical.

At the end of the day, you’re the only one responsible for your career and future.

And if you continue to sell something unethical… maybe you won’t get caught & everything will be fine. But if you don’t get paid your commissions, or worse, you get fired… don’t say the boys over at The Follow Up didn’t warn ya.

Has a company refused to pay you the commission you earned?

Login or Subscribe to participate in polls.

Sales Tip of The Day

Try removing the word “just” from your emails. ✍️ 

Using “just” makes your writing seem less confident, and creates an apologetic tone.

I am just following up.

I’m just reaching out because…

I just wanted to see if you received my last email…

Remove it. You don’t need it and you’re better off without it.

Sales in the News

  • Microsoft announced another round of layoffs that will affect customer service, support, and sales teams.

  • What to know about the increase in self-service B2B sales, and why some buyers don’t want to interact with sales reps.

  • A funeral insurance salesperson was arrested for faking insurance policy contracts that earned her over $11,000 in sales commissions.

  • From Reddit: It still takes time to get good at sales, even if your training was amazing (the thing that managers don’t understand).

Sales Weapon of The Day

Zest: A fee-free B2B gifting platform that allows you to send cool gifts & swag to your prospects. Only pay for the cost of the item you’re sending.

Cool Jobs at Cool Companies

A word from our LinkedIn Influencers:

🚶‍♂️When in doubt, walk it out 🚶‍♂️ 

Sales Meme of the Day

Well.. not reallllly a meme. But this one hit home 😅.

And that’s a wrap!

Reply to this email and let us know what you think of today’s topics.

What did you think of today's newsletter?

Login or Subscribe to participate in polls.