Amex's move puts it ahead of competitors for now, though most card issuers will have to offer similar policies by next year, when the gift card provisions of the credit card act go into effect. That law will still allow card issuers to charge "dormancy" fees, but only after a card has been unused for 12 months.

Amex, not surprisingly, is touting the consumer benefits of its new policy and downplaying the regulatory aspects:

"We think this is great for the consumer. It's great for the industry. It's right for the times," said Amex's Alpesh Chokshi. "It's not being driven by Washington. "What we're doing here is going far, far beyond that and saying there will never be monthly fees."

Chokshi didn't have much to say about buyers of gift cards, who will still have to pay upfront fees. But at least if you receive an Amex gift card and find it in the sock drawer five years from now, you'll still be able to use it.

American Express Drops Fees on Gift Cards [Washington Post]

Peter writes:

So I'm contemplating dropping my American Express Blue card, not because of the recent APR increases, but because of their website's password policy.

According to their website:

Your Password should:

• Contain 6 to 8 characters - at least one letter and one number (not case sensitive)
• Contain no spaces or special characters (e.g., &, >, *, $, @)
• Be different from your User ID and your last Password

That last one makes obvious sense, but to restrict a password to between 6-8 characters, and not allow special characters? That is HIGHLY insecure. I know I did my best to make as secure a password as possible with these limitations, but what about people who common, easily remembered, and highly guessable words as passwords? The limitation of 6-8 characters alone makes brute force a much more simple prospect. This complete disregard for security is quite bothersome

I've contacted a customer service rep about this in the past, but they of course had no acceptable answer. Any suggestions on how to bump this one up the chain?

Peter, you can try calling or writing using this American Express executive customer service contact info (it worked for another reader as recently as May 2009), but you might just want to look for another card provider altogether. You know, one that will let you create a decent password to protect your account.

(Photo: subcircle)

Well, no. Actually he just called customer service and asked if there was anything they could do for him. To his surprise, he got a "yes." He writes:

A heartwarming story to share with you... I was laid off from my job in march and have pretty much purchased nothing but groceries and the occasional smidgen of gin, in addition to transportation costs, utilities and my mortgage.

I recently received an annual fee of $50 for my Citibank American Express (the card was issued by Citibank South Dakota "pursuant to a license agreement with American Express). I called customer service and asked if it was possible to either waive the fee or change the account to a no-fee option.

Mind you, I also made it clear that my only other option was to close the account and to rely on other credit cards that I have with no fees...

Sylvia, a pleasant customer service rep, transferred me within minutes to Grant, "a customer service specialist," who explained to me that because of their agreement with AAdvantage/American Airlines, they could not waive the fee — however, I was offered a $50 voucher from Citibank, which will be mailed to me and I return... thus covering the membership cost for the following year.

I was quite surprised and pleased by the level of customer service shown... I was also wished luck in my job search... all very cordial and beyond the level of consideration that I anticipated.

How about that? A service story with a happy ending, for a change.

So now you know how to get out of AmEx's dreaded annual fee — just lose your job and get lucky enough to find a compassionate CSR on the other end of the line.

(Photo: DCvision2006)

Top 25 Most Valuable Brands

1. Coca-Cola
2. IBM
3. Microsoft
4. GE
5. Nokia
6. McDonald's
7. Google
8. Toyota
9. Intel
10. Disney
11. HP
12. Mercedes-Benz
13. Gillette
14. Cisco
15. BMW
16. Louis Vuitton
17. Marlboro
18. Honda
19. Samsung
20. Apple
21. H&M
22. American Express
23. Pepsi
24. Oracle
25. Nescafe

The big losers on the list were mostly car brands — Toyota, Mercedes-Benz, and BMW all slipped at least one spot on the list compared to 2008. American Express also took a big hit - dropping 7 places on the 2009 list.

(Photo:balmes)

-Standard APR is going from fixed rate 11.99% to Prime Rate plus 11.99%. Rate as of Aug 1, 15.24% (this is applies to new purchases AND ALL BALANCES PREVIOUS)
-APR for Cash Advances will be 21.99% plus prime.
-APR for Late Payment will be 23.99% plus prime.
-Late fees for less than $250 will be $19, greater than $39.

Here's the AMEX letter:

Like all companies large and small, our pricing has to be responsive to the business and economic environment. As a result, we have found it necessary to increase rates and fees on some of our products. Below are the principal changes to your account:

o We are changing your APR on purchases from a fixed rate to a variable rate. (Prime Rate plus 11.99% = 15.24%)
o We are raising the APR on cash advances. (Prime Rate plus 21.99% = 25.24%)
o We are raising the APR on any balances that have a penalty rate. (Prime Rate plus 23.99% = 27.24%)
o We are increasing the late fee.

Reader Neil is miffed:

For a company whose stock price has doubled in the last six months and who has paid back its TARP money, this sure seems more like pure greed than any response to market conditions. Either that or they want to sneak some crap in before new regulations kick in. Anyway, since I have been a loyal customer for nine years, I think it may be time to do my own adjustment and bolt them. At least then their short-term shenanigans would result in them losing a long-term profitable customer.

So is Brian:

I have an AMEX Blue card and it's always been my go card because it had a fixed interest rate of 7.9% on all purchases; not the best but it beats most. Earlier this year I got a letter from AMEX stating that due to a "hard economic environment" they were raising everyone's interest rates by 3%. So my fixed 7.9% became my fixed 10.9%. It is no longer my go to card and I was looking into what my best options were to transfer and close out the account, but I was taking my sweet time about it. [Then] I just got a new letter in this week from AMEX... So in short, my AMEX Blue account went from a fixed 7.9% to a fixed 10.9% to a variable 15.24% this year, and at no time was I ever late on a payment or was ever assess a penalty. As you can imagine I'm no longer taking my time and weighing my options and I'm going to transfer my account this week.

Adam can deal with the rate hike, he just doesn't like they're tying his hands:

Just yesterday I got a notice in the mail stating they are raising my APR by 5% (applies to existing balance and new purchases) and was curious that no where on this notice does it mention the ability to opt-out. I did a Google search on this topic and was surprised to learn that the option to opt-out is a just privilege, one awarded by many credit card companies, but not American Express. A call and email to customer service confirmed this....I shouldn't have any problem financially with this rate hike, but the prospect of future changes and not having any options at all doesn't sit well with me.

The letter they sent also notifies customers that the card is dropping overlimit fees. As we previously reported, AMEX is dropping overlimit fees because it's too expensive to get everyone's permission for them, a requirement of the new CARD act. Tying the rate increase to the fees getting dropped is in line with the credit card companies moaning, "We will have to make up our ill-gotten gains somewhere!" in response to the consumer protections initiated by recent credit card reform.

PREVIOUSLY: AmEx, Discover Ditch Overlimit Fees
(Photo: www.samwilkinson.org)

"Issuers should take overlimit fee income out of their P&Ls (Ed: profits and losses)," said Philip J. Philliou, a former Amex executive and a partner in the Philliou Selwanes Partners LLC consulting firm. "Under the best of circumstances, it's a much more limited income stream than in years past, and this additional hurdle of assessing the fee" under the new law "begs the question of whether it's efficient and practical" to do so.

[...]

"To continue to offer them on those who opt-in would be more expensive," [Desiree Fish, a spokeswoman for American Express] said. "We just don't rely as heavily on those fees, and it's not going to be as much of a financial impact for us as it would have been to put in that whole opt-in situation."

AmEx will still let select spendthrifts exceed their credit limits, but they will no longer charge for privilege. Discover claims that they're eliminating the fee as "a convenience to customers," and insists that they're trying to honor "the spirit rather than just the letter of the law." Yeah right. Creditors are universally responding to the consumer protection measure by raising rates and cutting rewards. Still, for AmEx and Discover customers, the overlimit fee is dead, and that's worth celebrating.

Law Hits Home as Cards Opt Out of Overlimit Fees [American Banker]
PREVIOUSLY: How Credit Cards Are Getting Meaner
(Photo: pnoeric)

I have been a card member with American Express for many years. I always paid my bill on time, I had never been late and never even came close to my available credit limit. On August 04, 2009 my loyal dog of 11 years needed to see a specialist because she had been sick and her regular vet could not pinpoint what was wrong with her. I placed a call to American Express to see how much credit was available on my card. They said I had $7,000 available for credit.

My dog was taken to the specialist and had to have immediate tests done. When my dog was out of surgery and was ready to be released to me, I had to pay the bill. I gave them my American Express card and it was denied on the first swipe. I knew that it had to be a mistake because I had called earlier that day. I called American Express from the vet's office and was put on hold for 30 minutes, only to be told that my account was frozen and up for a review decrease.

I had told the rep that I had not received a notice that my account was frozen and under review for a decrease. The representative, Watson, out of the Greensboro, North Carolina call center, was so very cold and callous and did not care at all about my situation. She refused to approve the charge in the amount of $1,100. I explained to her that I only had my American Express Card with me and that I had no other form of payment.

I asked to speak to a Team Leader only to be pushed off to a floor supervisor who would not budge on the approval. I was left stranded and abandoned by American Express. My dog was diagnosed with cancer that day. Trying to deal with American Express on one of the darkest days of my life was a total nightmare. American Express is not there for you when you need them, they turn their backs on you when you need them.

Elizabeth didn't say how she managed to pay the bill, but our best wishes to her and her doggie.

Sudden limit decreases with no notice make carrying a credit card for emergencies a pointless proposition. The real question here is: what triggered the account review? Was it her call to check the balance, or was that just a coincidence?

RELATED:
How Credit Cards Are Getting Meaner
Amex Hikes Rate, Drops Balance, Then Tries To Bribe Customer To Pay Off Debt Early

(Photo: Eddie~S)

My AT&T bill is set to charge to my American Express every month. Its simple, I get the points, and I make one payment to AMEX for everything. After receiving my recent AT&T bill, I noticed that AT&T stated that I owed $317.60, including $157.40 from last month's bill and $160.20 in new charges.

I did not notice anything significantly different last month, but I went and checked my AMEX statement anyway - sure enough on June 27, AT&T charged me $157.40 as they should have. Well, my bill stated that my card was declined and that's what the AT&T rep said. "Your card was declined, spoco." was pretty much the way it was handled. I could not escelate because "I did not have a valid concern that would need to involve a supervisor." The local AT&T store could not help either.

So even though I have transaction IDs and proof that the bill was paid by automatic draft to my AMEX, they will not discuss it. Well, on 7/26, they charged my AMEX the full amount due, $317.60. I contacted them again, and its the same song and dance - "I owed from a previous bill." I can't even get anyone to even look at the possibility that there was a mistake on their part.

Spoco, if you can't get anyone at ground-level customer service to help you, it's time to aim higher. Try contacting others within the company and explain what's happening.

You should also make it clear to AT&T that you will initiate a reversal of the payment should they refuse to investigate it.

Here's her story:

I have the executive membership which costs me $100 a year. Like everyone in this boat, I get a check each year around renewal time that can be cashed out, or used at the register for purchases or membership renewal. My membership expired this past April 6, and I used my check, which was more than enough to cover my membership fee, at the register at the same time I purchased a few other things.

Around mid-May, I applied for the Costco American Express card so I could start earning even more money back on my purchases. About a month after receiving my card, I noticed a mysterious $100 on my American Express for "membership renewal." That would mean that I double paid for the year. A couple of days later, I purchased some more items there, and the cashier informed me that my membership had expired and I would have to pay an additional $100 renewal fee in order to walk out of there with my stuff. I told her no, that I renewed in April and had been erroneously charged a second time in June and I was NOT paying a third membership fee.

The manager took my American Express, looked up my Costco member account, and admitted I had been charged twice. The only solution for the moment (as they were about to close) was to use a dummy account number to make my purchases (no cash back on those items), and come back to the store the next day to fix it. I went back the next day, and the lady at the membership counter fixed it in "Costco's system," but said I still needed to call American Express and request my money back.

I called them that afternoon, and they cheerfully and without question refunded my money. Then I requested to be removed from their automatic renewal system for members. And that was the key; she explained that every new American Express/Costco card comes with auto renewal attached and that the problem I experienced happens "all the time." So if you've paid your dues for the year, you'll be charged a second time for some reason. It shouldn't be hard for American Express to disable this feature and let members opt in instead of making members opt out once they realize they're being charged twice.

I would love to know how many people don't catch or don't challenge having to pay their membership fees twice a year?

RELATED
"Be Careful, Costco Backdates Renewals"
(Photo: Orin Optiglot)

Xiyang writes:

2 years ago I had an AMEX charge card and closed the account after 6 months of use. Just recently I decided to re-apply for the AMEX charge card, and since then... it has gone done the hill for me. A little background about me:

I'm currently employed, FICO is 724 with no lates, collections, or baddies whatsoever. Continuing..

In response to the application, AMEX mailed me a letter stating:

This letter is in response to your recent correspondence concerning your application for the AMEX Preferred Rewards Green Card.

We are attempting to confirm your total annual income. Unfortunately, the information you provided cannot be considered proof of your income. A letter from the following source(s), on original business letterhead confirming the amount and source(s) of your annual income, including social security number and billing address would be sufficient. Upon receipt of this information, we will be pleased to reactivate your application.

Accountant

Broker

Attorney

Its funny how AMEX has put me in a catch 22 situation since I don't have an accountant, broker, or attorney. They already received my 1040 transcript from the IRS and insist that my application will not be processed until I get the letter with the business letterhead. I asked if there was any alternative to the letter such as pay stubs, bank statements, and utility bill... but the request was DENIED. Seriously, is my credit report, and documents sent from the IRS not sufficient???? So I called 2 CPA's and an attorney to see what was their take was on this type of situation.

At the begining of my conversation with them, all 3 professionals speculated that AMEX's request is probably a phishing scam and they have never heard of such ridiculous request. After convincing them that this was a legitimate request, unfortunately they were not able to provide such letterhead stating such information (which I could completely understand). All 3 of them said that it would be a "HUGE" liablitity for their firm/ practice if they were to disclose such sensitive information (especially my income and SS #). At the same time, AMEX could probably sue their practice or firm if any of the information were to be incorrect.

Then I called AMEX executive support, and the representative was no help. The only thing she said was the policies are setforth by our chairman and the only thing I can do is transfer you to new accounts. Funny, because new accounts are the ones that are not willing to to help me. Honestly, is AMEX purposely trying to shun me?

I've given up on the application and will take my business elsewhere.

It's not unusual for AmEx to request financial data on letterhead, but it's usually information banks routinely provide. Has anyone seem a similar request before?

(Photo: TheTruthAboutMortgage.c om)

Mike writes:

I received an e-mail reminder to pay my American Express Blue card bill a few days ago, and, as always, I scanned the statement for any unusual charges before I submitted my online payment. To my surprise, there was a $1.55 Periodic Finance Charge. I have paid this card off in full every month since I got it and never been late for a payment, so I called their customer service number and was able to reach a human without much trouble.

While the service person was looking up my account information, I scanned my payment history on their web site, noticed that I had not submitted a payment in March, and remembered that the reason was that I had received my annual cashback reward, which was a sum larger than my balance at the time, resulting in a negative balance on that statement. I mentioned this to him as being the potential cause for the mix-up, at which point he explained to me an American Express policy of which I was unaware: there will be a finance charge any month during which you carry a balance and do not submit a payment.

"So you dinged me for carrying a balance and not making a payment, even though it was a negative balance?"

"Right, even negative balances."

"Was I supposed to submit a payment for zero dollars? I didn't owe anything."

"I realize that. It's just our policy."

"Doesn't that sound a little…insane to you?"

He replied by saying that he would rectify it in the computer, and the charge would show up as a credit on my next statement. I am still incredulous that this is actually a company policy, and you have to call and complain to avoid penalties for carrying a negative balance of a few dollars… ironically, a negative balance that resulted from their cashback rewards deposit.

(Photo: DCvision2006)

I have an American Express card. It's a regular gold AmEx, I've been a card member since 2005, some months I carry a balance, some months I pay it off in full. I'm just an average customer.

Over the past couple of months I've decided that I'd rather have a JetBlue AmEx than my gold AmEx. So, I've been trying to apply for a JetBlue AmEx. The key word is TRYING.

1- I tried to just change my gold AmEx into a JetBlue AmEx, but itdoesn't work that way (I've been able to change Citibank credit cards around like that, so I did think it might be that simple.)

2- the only way I could get a JetBlue AmEx was to apply, have my credit report pulled, etc. Ok. I'm totally ok with that.

3- I have a security freeze on my credit reports, so I did a temporary lift of the security freeze on Experian, so that AmEx could run my credit report.

4. My application was cancelled. Not 'declined,' cancelled. The online reason I was given was that my Social Security Number could not be confirmed, and so because my SSN could not be confirmed my application was cancelled.

5- I just got off the phone with AmEx's 800 number, to ask about this SSN message. I thought maybe I'd received the wrong error message, and this was a problem with my security freeze, but nope- the temp lift is fine, and my Experian report can be run. However apparently on top of that the AmEx SSN verification system that is used "because of 9/11" (exact words the rep used) could not verify my SSN to their satisfaction, and so that is why my application was cancelled.

6- But, the rep informed me, all I had to do was go down to my local Social Security office, and get a letter on SS letterhead verifying my SNN, and send it to AmEx, and then they would consider my application again.

I have no interest in going down to my local Social Security office, just so that I can apply for a JetBlue AmEx, but I am wondering about the "because of 9/11" reason that I was given:

- (sorry to be redundant, but) I ALREADY HAVE AN AMEX,
- the AmEx I already have I received in 2005. So obviously my SSN existed in 2005 and passed the "because of 9/11" procedures in 2005, so why am I having such a hard time just *applying* for an AmEx?

Can we get a moratorium on using 9/11 as an excuse for anything customer related? What happened to "for security reasons" as a legitimate excuse?

(Photo: apesara)

For years, American Express has flooded my inbox with emails intended for one of their customers (who gave them my address by mistake).

These emails contain sensitive data, including the customer's name *and last five digits of his account*.

Get this: American Express doesn't send out email verification letters!

I could tell you the whole sad, scary, hilarious story if you want me to, including the bit where the superior of a superior I finally talked to told me flat out that, "American Express does not email its customers the last five digits of their account," and then sat in awkward silence as I *quoted him back his own company's email*.

I just wanted you to know that customers of American Express may have their sensitive data compromised, and that AmEx makes this damn near impossible to report a case like this and then does absolutely nothing about it.

Seriously, I've seen better security on a video game forum.

(Photo: RobotSkirts)

Erik received one, even though he had never activated his corporate card:

I just got an AMEX bill for a card that 1) I never activated (it was a corporate card, and I was not about to give credit card reward points to one of the most evil companies on the planet) and 2) customer service said the account was closed in July 2007, which is funny, cause it was never opened. The customer service rep said there was a system error that lead to some canceled cards getting bills for 0.00, so other former card holders might get some similar, but there is no need to panic. Other than panic about how much AMEX sucks.

There you have it! Don't panic. Keep calm and carry on. And hope that your former addresses aren't receiving zombie statements.

(Photo: apesara)

I wanted to share a small but meaningful customer service success story I owe in part to you. As has become increasingly common in recent weeks and months, I received notice from American Express notifying me that my credit limit was being slashed from $3,200 (I'm a college student with little income) to $1,000. Not a huge deal, but still an unnecessary blow to my credit score. I received the e-mail notice on 4/26 and called immediately to find out why and to learn what my options were in terms of challenging the decision. I was transferred to an "account specialist" but between the accent and less-than-stellar support provided I suspect it was just typical outsourced off-hours junk support.

The woman ran through a list of reasons why I had my limit reduced, none of which, it seemed, applied to me at all. My credit situation has not changed much in the past year, if anything, it has improved. I never make payments late, and I never carry a balance. Sensing my growing frustration and knowing she had no power to get what I wanted done, the woman says, and this is close to a direct quote "Well sir, I'm looking at your account and it does appear you have a good credit score. Why don't you call back during our normal business hours and they can help you appeal this decision." I hung up.

Two days later, I called during "normal business hours" and spoke with a CSR and eventually got to her manager. They both said my account was "ineligible" to protest the decision. I pressed for a reason why I was ineligible and never got a straight answer, just repeated BS about why the limit was reduced. "Tough times sir, we all need to make sacrifices." I wasn't interested in a lecture so I hung up again and headed over to Consumerist to do a little digging on past experiences with American Express.

Sure enough, a post from 2007 with a phone number to the executive customer service office. Now four days after my receipt of the e-mail, I contacted the number provided by Consumerist. I spoke with a gentleman who sounded like he could get things done. He reviewed my account and said that I was definitely "worthy" to have my decision reviewed. The next business day I received a message from him notifying me the credit limit had been restored! VICTORY!

I sense that the credit card companies are just initiating blind, blanket limit reductions and in many cases the reduction is not fair. Thank you Consumerist for providng an invaluable resource and great entertainment. Keep it up!

We also have another post of email addresses to Amexecutives. Be sure to try them both if you've got a problem you think they should be able to resolve if only they heard all the details.

"13 American Express Executives' Email Addresses"
"Reach American Express Executive Customer Service"

(Photo: apesara)

He writes,

It's amazing how they'd be willing to lose a few thousand dollars in interest, an excellent and very loyal customer of over 7 years, plus some additional negative publicity over something like this. At this point I'll be taking them up on that 5.4% credit offer, paying them off completely and never using them again if possible. I won't close the accounts since it'll probably do my FICO no good, but oh well. I'll just be the customer they hate, the type that earns them no interest, the type to use Visa, it's accepted absolutely everywhere anyway.

"Cheeky American Express, double the interest but a 5.4% credit in return." [coreygo.com]
(Photo: TheTruthAbout...)

Melody writes:

Apple is supposed to have the best customer service, but my experience with them has been nothing short of frustrating. I was hoping you could help out.

I had ordered Applecare along with my Macbook Aluminum on October 14, 2008 through the Applestore. I later called to upgrade it to a 2.4ghz Macbook instead, and the CSR ended up making a mistake and inputting a purchase for AppleCare international instead of the US Applecare. When I took my laptop to get repaired on January 30, 2009, I was told I did not have AppleCare. I made numerous phone calls to AppleCare (case number 116149917) and even went to an Applestore and showed them my AppleCare agreement paper I went sent in the mail. They insisted that they had no record, but on my apple account, there is an order on October 14, 2008 that shows I purchased AppleCare with my computer purchase. I already went through a lot of difficulty with the original purchase because when the CSR upgraded my laptop from the 2.0 to the 2.4, she put a return on my printer, which I wanted to keep, and thus prevented me from obtaining a rebate. That took numerous phone calls to resolve. The situation with my AppleCare warranty was even more of a nightmare.

After several phone calls and getting transferred to separate departments, I finally was able to spoke to CSR Julia at (512) 674-2500, ex 41224. My case number is #116149917. After speaking to her, she figured out that the Apple customer service representative had make a mistake and sold me AppleCare International, so that's why it wasnt working. She wasnt able to switch that to regular US AppleCare, so she said that she would arrange a refund of the cost of the AppleCare to my credit card I used for my purchase and I should repurchase AppleCare again. She said it would be processed by the end of that week. That was on February 3, 2009. So I bought AppleCare again online, anticipating my refund from Apple. By February 18th, I still had not received credit back to my credit card for my AppleCare. I called Julia, and she told me that she never told me it would be done by a week, that it would take 10 business days, and that it would be 2 cycles to be credited to my card.

Today, I called Apple once again because the credit has not showed up on my credit card and it has been two billing cycles already (my billing cycle ends on the 18th). After talking to the CSR for an hour, they figured out that they had refunded back my purchase on my American Express back in February. They gave me two transaction numbers (******3703 and ******2091) to check on with American Express. I called American Express, and guess what, those numbers don't exist and there is no refund from Apple. I called back customer service, and was told they would "escalate" the refund. The new CSR I talked to said that a refund was never processed. What?? He said he would escalate it, and they would take a few days to ten days to process, and another 2 billing cycles to credit to my account. He said to call back again in 48 hours to check on the process, and gave me a new case number of 120786610.

So now, I'm just really really pissed off. Something that wasn't my mistake to begin with has already cost me 10 hours of talking to CSRs and getting put on hold, and re-explaining everything. And now, potentially it will be another 2 months until I get my refund. I emailed sjobs@apple.com on February 19th, and had no reply. I don't know what else to do to speed up the process. Calling customer service gets me nowhere…apparently I get made-up American Express refund transaction numbers and get lied to. Who else can I call? I'm a big fan of the Consumerist, so I was hoping maybe you could publish my story and some Apple higher-up or something might see it. I love my Macbook Aluminum (except for the problems w/ its keyboard), and I've been a Apple customer for years (iBook, iPod touch, iPods, Macbook). But, I've never been so frustrated with Apple in my life. I've spent way too much time trying to explain and get this problem solved.

I'm going to check on the status of the case again in 2 days, but as of right now, I have no faith…and I cant believe I have to wait another 2 months for the money for a product I never received. I bought this in October…and its going to be possibly May/June until I get my money back. I'm a student, so the $183 + tax ($195) is a lot of money to me.

Apple, care to fix this one for Melody? Sending her the $195 you owe is a good start, and if you really feel bad for the unnecessary bauble, nothing says "Sorry We Lost Your Refund" like a new iPod shuffle.

(Photo: robotpolisher)

American Express—assuming that's who Brandon called back—has apparently never heard of social engineering scams, considering how they verified Brandon's address the other night. You'd hope a credit card company would help educate its customers to be wary of giving out information over the phone, but the alleged Amex rep on the phone with Brandon demanded personal info and threatened to deactivate the card if he didn't comply.

I recently opened a charge account with American Express. I saw it as a way to not get into credit card debt and wanted the extended warranties, consumer protection, etc. that comes with the card. I had been very happy with my new Amex card, until last Friday. I was driving from my home in Dallas to Houston to visit family, and was somewhere in the middle of Texas, when at 8:45 PM, I got a call from Amex. All I hear from the guy on the line is "Hello this is so-and-so with American Express" and then my phone dropped the call (ATT). I was worried it was something serious since the call was coming in so late, fraud or something of that sort, so I called the number back. It reconnected me with Amex customer service. After going through the identification checks, I asked the woman on the line what the call had been in regards to.

She told me that Amex always called their customers within sixty days of a new account being activated to verify that they were who they said they were and they had given Amex a proper address. I was a little suprised that they were doing so at 9pm in the evening. When I said this to the woman, she seemed unphased and said it was company policy. She then told me that we needed to contact my bank to verify my address. At this point I was really shocked. "Most banks aren't open at 9pm," I said to the women. "Many bank across the country are open late on Fridays. At what bank do you have your primary account?" she responded. I told her that that I didn't really think this was necessary at 9pm in the evening while I was on the Interstate. She then told me that if I didn't verify my card, I would not be able to use it. "It'll only take three to five minutes." I relented and she called my bank, Citi.

The Amex woman put me on hold for a few minutes, and when she came back on the line, she had a woman from Citibank customer service with her. The Citibank woman had no idea what was going on. At first she also thought it was some sort of fraud situation, and seemed genuinely shocked when the Amex woman explained their address verification policy to her. After going through Citibank's lengthy phone verification process, I was told by the Amex woman that I had to ask the Citibank representative to tell me that address they had on file. At this point, I became nervous that this was some sort of fraud attempt. I demanded that the Amex representative somehow verify who she was. She could not. I then told her I was tired of going giving out my personal information on a three-way phone call, and refused to do so anymore. She then threatened to shut off my card. I relented again and asked the Citibank representative to verify my address. She did, and it was the same one Amex had on file. The Citibank representative apologized before she got off the phone for any inconvenience (they've been great since the partial-nationalization), and wished me a great weekend. At this point the conversation witht he Amex representative had gone on for over fifteen minutes. The Amex representative asked me if there was anything else she could do for me; I told her to put a note in my file to never call me again after 6PM central time unless it concerned fraud, and hung up.

Later I asked a friend who has had her Amex for three years if they had ever done this to her. They hadn't. Maybe it's some sort of new recession-era policy. Regardless, it certainly tarnished my view of American Express' supposedly sterling reputation.

(Photo: faith goble)

American Express has given her an "interim" refund in full, pending a review that will involve the credit card company presenting to PIC officials all of Blessman's documentation on the services she feels she was denied.

"One Spurned Purple Ticket Holder Claims Victory" [Washington Post] (Thanks to Megan!) (Photo: Patricia Jones Blessman)

This is a post in our Worst Company In America 2008 series. The companies nominated for this honor were chosen by you, the readers, and seeded according to number of nominations. Keep track of all the goings on at consumerist.com/tag/worst-company-in-america. Download the bracket here.

He writes:

For lost/stolen card you must explicitly ask: "I would like my card overnighted, can you help me?" The rep is trained to say "Yes, I'll be more than glad to overnight you your card at no additional charge!"

For a damaged card you must explicitly ask: "My card is completely unusable, can I get a new card overnighted?" The rep is trained to ask for the Customer Identification Number on the card, and will overnight the card at no charge.

There you have it, the secret words for making sure your American Express card gets overnighted to you with no fuss.

(Photo: Plutor)

kenneth.I.Chenault@aexp.com, kenneth.Chenault@aexp.com, daniel.t.henry@aexp.com, daniel.henry@aexp.com, edward.p.gilligan@aexp.com, edward.gilligan@aexp.com, alfred.f.kelly@aexp.com, alfred.kelly@aexp.com, l.kevin.cox@aexp.com, ashwini.gupta@aexp.com, john.d.hayes@aexp.com, john.hayes@aexp.com, judson.c.linville@aexp.com, judson.linville@aexp.com, louise.m.parent@aexp.com, louise.parent@aexp.com, thomas.schick@aexp.com, steve.squeri@aexp.com, douglas.e.buckminster@aexp.com, douglas.buckminster@aexp.com, william.h.glenn@aexp.com, william.glenn@aexp.com

(Photo: Andres Rueda)

* Even using one card, a 2% total return should be the minimum you receive back (versus the 1% that many cards tout as "standard".)
* Which card is best for you personally depends on how much you charge, where you charge, and when you charge.
* To make cash back cards work financially, you have to follow the other rules for good credit card management — no annual fee, pay off card every month, only buy stuff in your budget, etc.
* There are other factors you need to consider other than earning the most money. For instance, convenience.

I looked mainly at three cards in particular. Here's what's best depending on your circumstance:

* Chase Freedom — Much of your spending is concentrated in a few of Chase's 15 bonus (3%) categories (again, assuming you already have one of these cards and can get the 3%.)
* Blue Cash from American Express — You charge a lot each year (at least $15k, but more is better) and most of the charges are in the gas, grocery, and drugstore categories and occur later in the year (once you've gotten to the level-two rewards.)
* Schwab Bank Invest First Visa Signature — Most of your spending is not in any of the Chase or Amex Blue bonus categories and/or you want the simplicity of knowing you're getting a certain percentage back (2%) no matter what you charge or where.

Watch for the bait and switch. For instance, the Chase Freedom card recently lowered its rewards for new accounts. Instead of the once solid 3% cash back on certain transactions, 1% is the new norm. I go into my findings in more depth in the "The Best Cash Back Credit Card" on my blog Free Money Finance.

— FREE MONEY FINANCE (Photo: frankieleon)

Andrea writes:

I am sure I am not the first one. AMEX canceled my credit card on 01/31/2009. I have been a member since 1986 and always pay my full balance every month. They were supposed to mail me my yearly Costco cash rebate check of about $500 with my 02/14/2009 statement. Since they canceled my card 2 weeks ago they told me that the rebate is forfeited. They tell me Experian provided them with a bad credit report but my credit score is 720 and when I called Experian they told me that AMEX has been canceling many customer with excellent credit scores.

I wonder how much money AMEX has saved by canceling customers who were due rebates? This is outrageous.

That is outrageous. We suggest calling them up and having a chat with someone higher up. Perhaps also try calling Costco, which is generally pretty good about customer service, and would probably like to know that its partner isn't.

(Photo: Tengaport)

Balance Down Initiative
DETAILS: On February 13, 2009, American Express began 3 promotion to entice Cardmembers to reduce their outstanding revolving balance on CCSG Lending products by offering them Pre-Paid Cards or Statement Credits.

Handling Procedures: If you receive a call from a customer concerning the Balance Pay Down initiative, please refer to the Q&As below:

Prepaid card test FAQs
Q: Why was I selected for this offer?
A: We'd like to offer you the opportunity to simplify your finances and pay off your existing balance.
Q: My neighbor/friend received this offer but I did not. Can I enroll?
A: We apologize, but we can only honor this offer for selected cardmembers. However, if you're interested in paying down your balance, I can help you with that.
Q: Can you help me enroll in the offer?
A: You can enroll in the offer by visiting americanexpress.com/prepaidcardoffer and using the unique RSVP code provided to you on your mail piece. If you would prefer to enroll by phone, please call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
Q: I don't have access to the Internet; how can I enroll?
A: If you would prefer to enroll by phone, please call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
Q: I lost my mail piece that has my unique RSVP code; can I still enroll?
A: Yes, you can call 800-794-1308 and use the code: 138580001. Please note that your account will automatically be cancelled when you enroll in this offer. You will need your account number to enroll in the offer.
Q: I missed the enrollment period but am still interested in taking advantage of this offer?
A: We apologize, but we can only honor this offer for cardmembers who enrolled during the stated enrollment period. However, if you're interested in paying down your balance, I can connect you with a Customer Care Professional who can assist you with that.
Q: I would like to pay off my balance, but keep my account open. Can I do that?
A: By enrolling in this offer, your account will automatically be cancelled. If you do not enroll, but pay off your balance by April 30, 2009, your account will remain open but you will not qualify for the Prepaid card offer.
Q: I enrolled in the offer, but I can't pay my balance in full. What happens?
A: As communicated in the enrollment letter, your account will be cancelled. You must continue to make at least your minimum payments until your balance is paid off. However, you will not receive the prepaid card.
Q: My payment is due prior to March 1, 2009. Should I wait until then to pay so it qualifies for the Prepaid card (officially called Encompass Card)?
A: To avoid any late fees, you must pay at least your minimum payment by the due date. As long as you make another payment for the remainder of your account balance between March 1, 2009 and April 30, 2009, your account will qualify for the Prepaid card (officially called Encompass Card).
Q: Where can I use the Prepaid card (officially called Encompass Card)?
A: Your card can be used at select merchants that welcome American Express® Cards. The Card cannot be redeemed for cash and is not transferable. Card terms and conditions, usage restrictions and guidelines apply; please see your card carrier for details.
Q: How long will it take for the Prepaid card (officially called Encompass Card) to arrive?
A: Your Prepaid card (officially called Encompass Card) will arrive 4 weeks after the end of the promotional period (April 30, 2009).
Q: I enrolled in the offer and paid off my balance, but didn't receive a Prepaid card (officially called Encompass Card)?
A: I apologize for the inconvenience. Please give me a moment to review your account and confirm if the payments have been reflected on your account.

If Cardmember has not received there offer connect to a TSC CCP to complete the request

Q: I submitted a payment prior to April 30, 2009, but I see it did not post to my account until after the end of the offer period. Will I still receive the Prepaid card (officially called Encompass Card)?
A: All payments must be reflected on your account by April 30, 2009 to qualify for the Prepaid card (officially called Encompass Card) offer. We apologize for any inconvenience.
Q: Is my account considered closed at my own request, or at American Express's?
A: Your account will not be reported in a negative manner to the credit bureaus, however it will be reported as "closed at consumer request."
Q: How will the account closing be reported to the credit bureaus?
A:Your account will not be reported in a negative manner to the credit bureaus, however it will be reported as "closed at consumer request.".
Q: Will I receive a confirmation of the account cancellation?
A: Your statement will reflect the account cancellation in the month following the account cancellation. Please note that depending on your account billing date, it is possible that you may not see the cancellation on your statement for up to two months.

CCPs: If the Cardmember asks for a confirmation letter connect the Cardmember to TSC.

Q: How long will it take for my account to be cancelled?
A: It may take up to 2 weeks for your account to be cancelled after enrolling in the offer.
Q: I enrolled in the offer, but my account still looks active. Why?
A: It may take up to 2 weeks for your account to be cancelled after enrolling in the offer.
Q: How long is my prepaid card valid for?
A: The prepaid card will expire May 31, 2010; unused points will be forfeited the first day after the valid thru date, subject to applicable law. For additional information about your prepaid card, please see the full terms and conditions enclosed in your card carrier.
Q: What do you mean by a $300 value prepaid card? How is the card denominated?
A: The Card is point based with 1 point = $1 in purchasing power. Terms and conditions apply. Please see your card carrier for details.
Q: I enrolled in this offer, but would like to reinstate my account? Can you assist?
A: Let me direct you to the appropriate person who can assist you submitting that request. (CCP: Connect the Cardmember with an existing Customer Service CCP)
Q: I am a Blue from American Express® Cardmember or Optima® Cardmember. What happens to my Membership Rewards Express® points now that my account is cancelled?
A: Any points accrued in your Membership Rewards Express® program will be forfeited upon account cancellation. See Membership Rewards Express® program details for full terms and conditions.
Q: I am a Blue Cash from American Express® Cardmember. What happens to my rebate now that my account is cancelled?
A: You will forfeit your entire Rebate for the Rebate Year if your account is cancelled before the Rebate posts to your account. See your Cardmember Agreement for full details.
Q: I received the offer for the prepaid card, but I would like a statement credit instead?
A: We apologize, but your account qualifies for a $300 value prepaid card, and we cannot offer you any other incentives at this time.
Q: I took advantage of the offer you sent me, but received a letter saying that my account was cancelled by American Express/for a credit reason. Why?
A: Let me direct you to the appropriate person to discuss this with you. (CCP: Dial-transfer CM to RLA team).
Q: If my account was cancelled prior to enrolling in this offer, can I still enroll?
A: We apologize, but you are not eligible to receive the $300 value prepaid card if your account was cancelled by American Express prior to enrolling in this offer.
Q: I enrolled in the offer, but subsequently received notification that my account was cancelled by American Express for credit reasons. Am I still eligible for the prepaid card if I pay down my balance?
A: Yes, as long as your balance is paid down, you will be eligible to receive the $300 value prepaid card.
Q: What does the footnote regarding taxable income mean?
A: Any income provided by American Express may be considered taxable income to you. Please check with your personal tax advisor with any questions regarding tax implications.

PREVIOUSLY: AmEx Pays Some $300 To Zero Their Balance And Leave

[via creditcardforum.com]

American Express Wants To Help You 'Simplify Your Finances' — Will Pay You $300 If You'll Close Your Account [CreditMattersBlog] (Photo: nicubunu)
UPDATE: Internal AmEx Doc On $300 Bribe To Zero Account And Leave Program

Reader San says that there's no opt-out information anywhere in the 4 pages of changes Amex mailed to her. The clause reads:
Amex doesn't seem to want to offer the opt-out information in this mailing, but hey, that's why you read Consumerist, right?

To opt-out of marketing by telephone, call: 800-297-8378. Remember, you can also tell American Express and any other company that contacts you via phone to stop. If they subsequently call you again, they may be subject to a fine of up to $11,000. Your phone number does not need to be registered on the Do Not Call list for this fine to apply.

We were not able to locate any way to opt-out of the text message program, so we suppose you really shouldn't borrow your friend's cellphone when you need to call Amex. Buyer, er, caller beware.

It's not like Ronnie Sue was a disloyal or obviously risky customer:

Of all my credit cards, my American Express card was my favorite. As I child, I fell for those television commercials with Karl Malden who warned us, "don't leave home without it." And who wouldn't want to have the same card that Ellen DeGeneres and M. Knight Shamalayan carry? I was overjoyed a couple of years ago when first received I got the amex that allowed me to earn frequent flyer miles. Although this particular card had a revolving line of credit, I judiciously paid off the card monthly because THAT was the card I chose to have around if I ever ran into trouble. I don't mess with advice from Karl Malden.

Even worse, Ronnie Sue spent her own money calling AmEx and her bank at $0.99 per minute. If you ever get lonely or need to call customer service while abroad, call collect. It makes the company literally pay for their mistake (or your loneliness,) and since companies hate paying for things like customer service, your call will be immediately expedited to get you off the line.

Moral of the story? Add "call your credit card company" to any complete pre-departure checklist.

Why I Hate American Express [Diary of a Fab Black Woman]
(Photo: TheTruthAbout...)

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.

'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!)
PREVIOUSLY: NewCreditRules Asks, Which Of These Stores Will Get Your AMEX Card Reduced?
American Express Judges You Based On Who Holds Your Mortgage, Where You Shop
AMEX Lowers Your Credit Limit If You Shop Where Deadbeats Shop
(Photo: danesparza)

Today, he posted a list of every place where he's used the card over the past two years, in an attempt to provide some transparency where American Express will not:

Since American Express won’t tell me which establishments are bad, perhaps you can help me. Below are all of the businesses I have patronized during the time that I have had the card from Dec. 2006 to Jan. 2009. Which do you think are the bad “establishments”?

 

Possible Bad Establishments

Air Jamaica Amazon.com Applebee's (Gastonia, NC) BP (Ashland, VA) BP (Owner Aziz Dhanani) Boston Market (Boston, MA) Brinks Home Security Cactus Car Wash Chateau Elan Winery Cheesecake Factory (Cambridge, MA) Chick-Fil-A Chicago's Nancy Pizza Citgo (Baltimore, MD) Citgo (Greater American Food Atlanta) Dave & Busters D & K Clothing Donor Town Square Ed Voyles Honda ESPN Zone Exxon Mobile Figo Five Guys Fogo De Brazil Geisha House Hershey Park (Hershey, PA)

Island Romance K & G Men's Store Kyles Friendly (Greensboro, NC) Leadership Atlanta LeBlanc Plumbing Mahogany Restaurant (Washington, D.C.) McDonald's Moe's Southwest Grill Opera Paschal's Restaurant Quick Trip Quizno's Red Robin Ruby Tuesday Satellite Radio XM Sirius ServPro Sheetz (Boston, MA) Sonsie Restaurant (Boston, MA) Spirit Airlines Starbucks Swept Away Couples Resorts United States Post Office Walmart Zales

 

What Johnson is really spotlighting is AMEX's new behavioral scoring methodology, which the company won't reveal details of, but which was used to cut his limit. ABC News, which has an article and "Good Morning America" segment on Johnson, describes the process:

Traditionally card companies used a customer's purchasing history to flag suspicious transactions. For instance, a card company might flag a large withdrawal at a casino if a card customer lives on the East Coast and never gambles.

But Manning says banks are now using the information to model the behavioral patterns of its customers in order to try to determine credit risk.

"Ultimately, the banks now are looking at what we purchased and they're making decisions on whether it's appropriate or not," Manning says.

He says in a recession it might be wise for some consumers to save money by reducing their spending or choosing to shop at a discount store. "And, yet, that creates a red flag where all of a sudden these companies are saying, 'You may be in financial trouble, and we're going to cut you off before we take a loss," Manning said.

Hopefully, in the months to come Johnson will be able to uncover more details about AMEX's new decision making process, and about how credit card companies in general are changing their rules in this economy.

NewCreditRules (Thanks to armour!)
(Photo: TheTruthAbout...)

After being an American Express cardholder for over a decade, American Express canceled by card today (Tuesday, January 20, 2009). My back story as a card holder is as follows:

* I have been a member for 13 years.
* I have never paid late, always early.
* I always pay my balance in full every month.
* My 20K limit was reduced several months ago to $1,900.00.
* As of Tuesday, January 20, 2009, American Express canceled my card.

To top it off, I am out of town traveling for work (I am self-employed and use the card for my business). I currently have only my Amex card physically in my possession - no others. I was to travel back home tomorrow (Wednesday), however, since American express canceled my card, I presently have no means to purchase an airline ticket to return home. I found out my Amex was canceled when I tried to make an Eleven dollar purchase at the Post Office. Prior to this, Amex did not contact me stating that my card was canceled.

(Photo: TheTruthAbout...)

29-year old black entrepreneur Kevin Johnson, who has a perfect payment history and a high credit score, recently got a letter from AMEX cutting his credit limit. The letter said, "Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express." Kevin couldn't tell what set it off, his statement had what he saw as normal transactions, including places like Amazon, Ruby Tuesday, WalMart, Starbucks and Federal Express.

AMEX defended its practice saying, "We’re just doing this to manage risk...customers who make transactions with certain merchants tend to have a higher proportion of credit issues or a higher probability of default."

Guess you shouldn't use your AMEX at Walmart.

Card companies adjusting credit limits [Atlanta Journal-Constitution] (Thanks to Randy!)

Reader Nick says he is opening a new business and has been charging his expenses to his Platinum AMEX — and paying on time — or he was... until what has been happening to so many people happened to him. AMEX randomly cut him off.

Nick says:

I read the consumerist all the time. I also see that, over all, American Express is the best credit card company to deal with. I have just experienced the worst customer service I've ever received, and I STILL haven't gotten my problem resolved, even after calling Executive Customer Service.

I normally spend approximately 7-8k per month on my Platinum Card. I have an additional card holder that does about 50-60% of the spending. I always pay on time, and haven't ever been late or missed a payment. I amcurrently opening a new business, have been under construction, so I have been using both of our cards for construction runs to Lowes and other big purchases. Last month, our bill was 12,500. The bill closed on December 1. December 4, I got a call from American Express informing me that, "Until you pay us, you can't use your card." The bill was due on December 15th. I submit our bill to our investor, who in turn, pays me, normally by the 8th or 9th of the month. So I took care of paying the bill, and thought everything was fine.

I got a plane to Los Angeles yesterday, and thought that I would have a great trip and that everything would be great. I couldn't be more wrong. I went to make a purchase this morning on Delta.com for trip in a few weeks, and it wasn't taking my card. I called AMEX and was referred to the "financial review" team. I got a person in India that I could barely hear or understand, and after a 45 minute call, was told that "basically, we don't think you can pay your bills."

This after I've never missed a payment or been late in any way across any credit line. I called back again, got someone in the US finally, explained what was going on, and that I was stuck in Los Angeles on vacation, and that I don't carry another card. I carry my AMEX because it's the card I use for everything. I told them that I was 3000 miles from home, and that I couldn't even go out and have a good time while I was here. I asked why American Express didn't inform me of this, didn't send an email, or a letter asking me to provide financial documentation. No answer, no explanation.

They didn't seem to care. So I did what any consumerist reader would do... got in touch with executive customer service. Christine, the executive assistant got me in touch with someone that "could help me." I got in touch with the executive customer service agent, and they said that they could help out, and understood my situation. They sent me the form that they said I needed to fill out. It was a form AUTHORIZING THEM TO LOOK AT MY TAX RETURNS. I asked if they could turn my card back on for small purchases. She said they wouldn't. So I am in Los Angeles, with no purchasing power, and after faxing back the form immediately, she called back and told me that she wouldn't have an answer for 3-5 business days.

So no call, no letter, no call. They let me get 3000 miles from home, and now the "card that never leaves you stranded" has done just that.

Be careful, it will be the last time that I recommend the Platinum Card. Time to start carrying the other cards that I have that don't want to see tax returns just to let you use their cards.

A few quick Google searches will turn up quite a few other similar stories of consumer credit being slashed as banks try to manage their risk. Even with macroeconomic circumstances being what they are — leaving someone hanging 3000 miles from home is pretty inconsiderate — especially for a card that carries a $450 annual fee and supposedly has excellent travel benefits.

Basically, the language was just an add-on to a section that said that if there is some kind of error or dispute about a debit, and AMEX gives you the credit temporarily back to your bank account, and it turns out the debit was okay in the first place, then they will take it back. Nothing about that is changing, just now you explicitly agree that that's okay.

Here's the old clause:

If we determine that there was no error, we will send you a written explanation within three business days after we finish our investigation. Upon your request we will provide you with copies of the documents that we used in our investigation. If we have provisionally recredited your Bank Account during the investigation and determine that there was no error, we will notify you of the date on which we will redebit your Bank Account, and the amount to be redebited.

Just add, "You authorize us or an agent to debit your Bank Account for this amount." to the end.

The rest of the new terms of service changes, with some of the increased APRs and fees may still be cause of concern for some customers.

American Express: "We Can Yank From Your Bank Automatically" Clause? Not Quite [CreditMattersBlog] (Photo: pnoeric)

AMEX just sent out some new changes to terms of service for some customers, and one of them has us scratching our heads in particular. There's various increases in APRs and fees, but then under "In Case of Errors or Questions About Your Transactions" they're now adding "You authorize us or an agent to debit your Bank Account for this amount." What scenarios would qualify under "errors" or "questions"? Don't like the sound of agreeing to let anyone make withdrawals on my bank account without myself pulling the lever. The notice of TOS changes, inside...

Notice of Changes to Your Account

The terms of your Account are subject to change in accordance with the American Express Cardmember Agreement ("Agreement") governing your Account (including increasing rates and fees, changing fixed rates to variable rates, and adding new terms). Any language in your Agreement contrary to or conflicting with terms amended herein is replaced fully and completely. All terms of the Agreement not amended herein remain in full force and effect. These changes apply to existing balances and future balances on your Account. We urge you and any Additional Cardmembers on your Account to read this notice carefully and file it along with your Agreement in a safe place for future reference.

APR for Flexible Payment Features
For billing periods that begin on or after December 2, 2008, we are replacing the third sentence of subsection B of the Finance Charges section of your Agreement with the following:
- "Except as provided below, the APR is the Prime Rate plus 11.99%."
This is a variable rate. As of October 13, 2008, the Prime Rate plus 11.99% is an APR of 16.49% and a DPR of 0.0452%.

APR for Default
For billing periods that begin on or after December 2, 2008, the last sentence of subsection D of the Finance Charges section of your Agreement is replaced with the following:
- "The Default Rate is a DPR which corresponds to an APR equal to the Prime Rate plus 23.99%."
This is a variable rate. As of October 13, 2008, the Prime Rate plus 23.99% is an APR of 28.49% and a DPR 0.0781%.

Late Fees
We are changing the day upon which late fees may first be assessed as a result of late payment. If you have not paid the Amount Due on this statement before the 10th day after the Closing Date of your next statement, you will be assessed a $35 late fee (Iowa $15). For billing periods that begin on or after December 2, 2008, we are replacing the Late Fees section of your Agreement with the following:
- "If any portion of the Amount Due on a billing statement is not credited to your Account before the 10th day after the next Closing Date, we may assess a fee of $35 (Iowa $15). In addition, if any portion of that Amount Due is not credited by the following Closing Date, we may assess an additional fee in that same billing period of the greater of $35 or 2.99% of any amount past due (Iowa $15). If any amount past due is not credited to your Account by successive Closing Dates, we may assess a fee equal to the greater of $35 or 2.99% of any amount past due (Iowa $15)."

Transactions Made in Foreign Currencies
Effective January 11, 2009, the bolded clause in the Transactions Made in Foreign Currencies section of your Agreement is replaced with the following:
- "in each instance increased by 2.7%."

Electronic Funds Transfer (EFT) Agreement
Effective December 2, 2008, we are adding a sentence to the last paragraph of the "In Case of Errors or Questions About Your Transactions" section of your EFT Agreement. The following is added after the third sentence:
- "You authorize us or an agent to debit your Bank Account for this amount."

(Photo: TheTruthAbout...)

From the Wall Street Journal:

While retailers, car companies and others hit by the slowdown in consumer spending haven't gotten the government money, financial firms of all kinds are getting federal bailouts.

It isn't clear if the application under the Troubled Asset Relief Program came before or after the credit- and charge-card giant got Federal Reserve approval Monday to become a bank-holding company.

Amex's shares are down 57% this year as even affluent consumers keep their plastic in their wallets. The WSJ says that it is unclear how Amex would use the money — and that it's clear that $3.5 billion won't help with the consumer spending slump.

Notoriously slime-filled credit card issuer Capital One has already received approval for $3.5 billion in bailout cash.

AmEx Said to Request $3.5 Billion in U.S. Aid [WSJ] (Thanks, Jameson!)
American Express Wins Fed Approval to Become Bank (Update1) [Bloomberg]

"Consumers have thrown in the towel,'' said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who correctly forecast the drop in spending. ``They have no choice but to cut back on spending in a very big way. This is going to be a fairly deep, long recession.''

American Express is feeling the pain, as consumers stop spending — and stop paying their credit card bills.

American Express Co., the largest U.S. credit-card company by purchases, said yesterday it'll slash 7,000 jobs as consumers spend less and defaults rise. Cardholders failed to repay loans in the third quarter at almost twice the rate of a year earlier, and the company set aside $1.4 billion for loan losses.

U.S. Consumer Spending Declined 0.3% in September (Update1) [Bloomberg]
(Photo: mirnanda )

So it all began when Dan's father-in-law died recently . Now AMEX is hounding the mother-in-law for the $15,000 due, apparently because they don't want to have to go through the estate lawyer.

His mom was listed as an authorized user on the credit card. Under Alabama state law, authorized users are not responsible for the debt. Ah, but you're the sole account holder says AMEX. When the family checked his credit report, they see that its listed that the father-in-law closed the account in September '08. During all of September, the father-in law was in a coma.

Then on the mother-in-law's credit report, there's now an AMEX account that says it was opened in 1982...but not reported on the credit until September '08.

It seems that so they could pursue the mother-in-law for the money and avoid dealing with the estate, AMEX closed the father-in-law's account, then made a new account where the mother was solely responsible, and then transferred all the debt over to her. Now the aggressive and bullying collection calls have started.

"Isn’t this illegal and how should we proceed?" asks Dan.

(Photo: Clemson)

Pierre says:

I just received a shocking call from American Express.

My small business has had an American Express Business Account for the past two years. Our credit limit was around $25,000 and our average bill was approximately $12,000/month.

We have NEVER had a single late payment and, according to Amex's customer service reps, our spotless payment history is considered "perfect." In fact, most of the time, we pay our full bill prior to the date it is due.

So imagine our surprise when Amex called us today to inform us that our new credit limit on the account was $1,800. When pressed for details, the Amex rep made some vague references to a credit report.

However, our credit report is spotless. The only possible factor could be the fact that, since we are a private company, we do not share our financial information with Dun & Bradstreet.

Our company has bank lines worth several millions of dollars. We have been a loyal Amex customer. In an era where defaults are soaring through the roof, we have consistently paid our bill in full and prior to its due date. Doesn't that count for anything anymore?

Maybe not. The Wall Street Journal says:

Credit-card issuers have been decreasing credit limits in the wake of the subprime meltdown. Folks with good credit scores and solid credit histories are now getting caught in the fray.

"Most banks are cutting their credit limits," says Carol Kaplan, spokeswoman for the American Bankers Association. "They're doing it to everyone."

(Photo: Getty)