Last month we posted about Kevin Johnson, a 29-year-old self-employed businessman with excellent credit and an established history with American Express, who had his credit limit cut by 65% because AMEX said he was shopping at the wrong sorts of stores. Johnson has created a website called NewCreditRules.com to try to uncover what, exactly, he did wrong to fall under AMEX’s high risk category.
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
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)
Chicago’s Nancy Pizza
Citgo (Baltimore, MD)
Citgo (Greater American Food Atlanta)
Dave & Busters
D & K Clothing
Donor Town Square
Ed Voyles Honda
Fogo De Brazil
Hershey Park (Hershey, PA)
K & G Men’s Store
Kyles Friendly (Greensboro, NC)
Mahogany Restaurant (Washington, D.C.)
Moe’s Southwest Grill
Satellite Radio XM Sirius
Sheetz (Boston, MA)
Sonsie Restaurant (Boston, MA)
Swept Away Couples Resorts
United States Post Office
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.