Despite sending customers letter saying otherwise, American Express now insists that it never blacklisted cardholders based on where they shopped. Those notes explaining that “other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express?” Whoops! Just a big misunderstanding! Not unlike the comment they gave to ABC explaining that “shopping patterns” were used as a “contributing factor” in slashing credit lines, a statement AmEx later retracted. So what’s really going on? Let’s explore…
Ron Lieber at the Times dug out his fedora and wrote up an excellent summary describing the depth of AmEx’s data mining. The company relies on “hundreds of data points,” including:
- Shopping Patterns: Let’s not kid ourselves, AmEx can say whatever they want but clearly they’re looking to judge you based on where you shop and how you stack up against similarly-situated consumers.
- Geography: That fence in your yard isn’t enough to keep from getting lumped in with your neighbors. AmEx knows all about the demographics of your area, like how well off your neighbors are and how often they pay their bills.
- Mortgage Data: AmEx doesn’t want to lend to subprime borrowers or people with mortgages from subprime specialists.
- Multiple Houses: AmEx used to love people with more than one house or mortgage. More chances for pillow fights and all. Now the slumber party days are over and they’re wary of anyone with a spare house.
- Industry Strength: AmEx knows which small business customers are in bad industries and are lending accordingly. “If you’re a dentist, say, you may have less trouble with the card company than if you work in construction or finance.”
- Financial Soundness: This was always the biggie and it remains so. Every credit card company looks at how much debt you have compared to your earning power.
So what you can do? Sure, you can use cash or get a card from a credit union. Wild as it may sound, our preferred strategy is to spend wisely and not take the rejections too personally. To credit card companies, you’re just a data point, not a person.
‘GMA’ Gets Answers: American Express Reverses ‘Where You Shop’ Policy Following ABC News Investigation [ABC News]
American Express Kept a (Very) Watchful Eye on Charges [The New York Times] (Thank to everyone who sent this in!)
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