Singing the American Express Blues

A few weeks ago I was having lunch with a friend who is a very successful entrepreneur. He told me he'd been having some problems recently with American Express (AXP). They'd been denying charges and giving him all sorts of grief. Our lunch turned into a support group because I've been having the same experiences. We shared our horror stories and I felt a bit better about it.

My friend sent me a link to this story by David Lazarus in the LA Times last week. It turns out we are not alone in getting hosed by American Express. They are doing it to all of their best customers. David starts out his story with the following observation:

What does AmEx want?

That's a question American Express cardholders are asking more and more these days as the company turns the screws on long-standing customers and seems determined to show as many as possible the door.

I've been a customer of American Express since 1983 and have never failed to pay a bill. Right now, between my business interests and family, I carry and pay for five American Express accounts. I'm not going to get into the monthly amounts that these accounts turn over, but I will say that they are significant.

The smallest of these accounts is an old Flatiron Partners account. We don't use that account very much anymore, but we do still use it occasionally. A month ago, we were accidentally late paying that account. And as a result American Express shut down all of my accounts without notifying me. My partners in Union Square Ventures could not use their cards, I could not use my personal card, they shut off all of the accounts I have with them even though they were not in any way related to the Flatiron account. I suspect the accounts are linked because they all funnel membership miles into one single account.

But that's just one example of the hassles of being an American Express customer these days. My wife and I are routinely denied when making charges at stores and restaurants. When we call to ask why, we are told that the charge looks "fraudulent". And then they ask us if we really are making that charge. When we assure them that we do indeed want to make that purchase, American Express authorizes it.

I understand that credit card fraud is a huge problem these days and appreciate that American Express protects its customers from the fraud. But I've noticed a 180 degree change in the company in the past year or so and I think they've simply gone too far.

Maybe American Express should offer its customers the opportunity to pay an annual fraud charge that insures that American Express will not deny any charges on our accounts. I'd be happy to do that. I realize they are taking a beating and I also feel that whatever algorithms they are using to detect fraud are often wrong at the most inconvenient times.

As for deadbeats, the credit history of a person should be the single most important data point in determining credit risk. When I called American Express to figure out what was wrong with my cards in the middle of the Flatiron situation, I was told it was their policy to shut down all accounts if there was a late payment on an account. I asked if my 26 year perfect credit with them was material to the situation and I was told it was not. I hung up on them.

I understand the business challenges facing American Express. Fraud and increasing default rates makes for a very unpleasant business situation. But as David points out in his article, they should be careful not to show their good customers the door.

During the brief time I was without all of my American Express cards, I used my Chase VISA (V) card and the experience was not any different. A swipe is a swipe and not one of them was denied.

Comments

[Top Gun:]

Maybe you should pay your cards on time, duh! In case you haven't noticed, the "credit crisis" was caused by cascading debt default by people who over leveraged, borrowing to pay borrowing costs. Just the sort of thing your missed payment signaled.

In you first paragraph you say you've never missed a payment in 25 years, yet you minimize the importance of missing one now.

Your bad, AXP doesn't need you as a customer with that attitude.

May 04 07:08 AM

[kevinkev99:]

Agree with "Top Gun". 25 Years doesn't mean anything if you lose your job and can't pay your bills now. The delinquent cardholder rate has crossed 10% for most lenders, and a missed payment is the first sign of financial distress. Pay your bills on time or else.

May 04 11:02 AM

[cmhager:]

I agree with the first two comments. Times have changed, and they can't afford to be anything less than cautious, and in these times, this is the mark of a responsible company. Sounds like you made a mistake and now want to dole out a little payback. Pay your bills on time, sir.

May 04 11:27 AM

[PROXIMO:]

I disagree with the sanctimonious sh#t of all of the first three previous posters. You carry MULTIPLE Amex cards for 25 years and are late ONE payment(by accident) and AMEX yanks all your accounts. Without even a courtesy call. What a crock of sh#t. And people wonder why Cap One and the other card companies are reviled and in a world of hurt. Maybe if they treated their good customers like good customers, instead of like AIDS infected rodents, they would be in decent shape.

May 04 12:32 PM

[Eric in IL:]

AMEX was be seriously wounded. If Bernanke had not created specific liquidity for them in March, they would have gone the way of Lehman. I do think the brand is very impaired and this crisis shows that they have no real edge on MC or V. The AMEX name allowed them to charge high fees for a long time, but more and more vendors do not even accept AMEX anymore. Their Foreign Exchange fees are higher than all other major companies and they constantly nickel and dime customers. MC and V have caught them and have no credit exposure with respect to service, card benefits, acceptance, business use, etc. At a P/E of 13, AXP is expensive right now, and 17x forward... no way they grow 17% anytime soon.
That said, you really cannot be delinquent right now; but in the past companies were pretty good about forgiveness. AMEX could become like Sprint, where customers have such a sour taste from past experience that there is almost no way to incent customers to be loyal. Sprint may finally be turning the corner.. 10 Years later.
Look at the 10-Year chart for S, that could be what AMEX looks like.

May 04 01:02 PM

[Dr. O:]

Sorry for your horrific Amex experience. Is this the best business practice AMEX can come up with to mitigate their loss risk after you've been a stellar customer for a quarter of a century?

I thank you for the note, because I have a couple Amex cards too. No problems so far. However, I have had a Crapital One card that I used frequently, paid in full each month, never late, and my interest rates were raised from 7.99% to 17.99% on purchases.

It didn't affect me because I don't carry balances, but I was so insulted (wouldn't 12.99% APR been sufficient?) that I canceled the card. No, I didn't have another late payment anywhere else.

And these credit card companies are still running thousands of TV commericials weekly trying to get people to sign up, while running off their old customers. I don't get it.

May 04 01:11 PM

[Thomas J. G...:]

I think credit card companies should think twice about doing anything (reduce credit limits, increase fees) to people who have always paid their bills on time. If customers mess with them by missing payments, fine, tighten the rules, . But a person who always paid their bill has been straight with them, and they should be left alone. This just seems like good customer service.

May 04 01:39 PM

[Alessandro:]

American Express has been closing cards of their best customers, causing them to lose their frequent flyer miles, one customer lost 7 million miles.

Joel Grover of KCBS reported the above.

Then in doing my own research I discovered an article in which American Airlines is going to trade Citibank frequent flyer miles for better loan terms.

Put the two things together. AMEX eliminates customers frequent flyer miles by closing their cards, then repackages those "lost" frequent flyer miles to citibank for better loan terms. Highly illegal it would seem.

I reported my findings over 3 weeks ago, but the story has not lifted off, yet.

Join my Chase Bank / credit card industry protest at www.Daily-Protest.com

This is not the time to be raising everybody's interest rates nor is it the time to Change Terms and not allow a customer the right to "opt out".

The first three respondents are uninformed about what is really going on.

-Alessandro Machi

May 04 01:55 PM

[Teutonic Kn...:]

All --

Nothing to bragg about or even to be contrarian. My experience with AMEX had be pleasant and satisfying. They gave me a generous limit without even asking, a great term on a baleanc transfer like 0% with no transfer fees, great and responsive customer services, and the most clear, user friendly and readable web page (unlike some of the Big Banks that look so busy and dazzling to the eyes to to even hard to find anything). So just to be fair to AMEX, my 2-cents input.

Teutonic

May 04 02:43 PM

[DonFurio:]

I know Amex has many different cards, but I was pretty sure they have Amex points, not miles. Why would someone not use the 7,000,000 miles or points they had, and if someone really had that many miles or points, I would think they make sure everything was on the up and up.

To the author, I'm sorry you had such a negative experience with Amex, but I have to wonder why you don't have several different credit cards unless you have a balance. If Amex were to try and deny a purchase, why not use another card? I'm sure it's frustrating to you that they didn't treat you with more respect given your history, but since credit cards are un-secured debt, they have to react as quickly as they can. I agree what they did was excessive, and I would write them a letter and I would also see if there is any other credit card companies that can better serve your needs. Unfortunately, the people in their phone customer support probably don't understand enough to help you. If you do pay your bills on time as you mention, why not set up an automatic payment?

On May 04 01:55 PM Alessandro wrote:

> American Express has been closing cards of their best customers,
> causing them to lose their frequent flyer miles, one customer lost
> 7 million miles.
>
> Joel Grover of KCBS reported the above.
>
> Then in doing my own research I discovered an article in which American
> Airlines is going to trade Citibank frequent flyer miles for better
> loan terms.
>
> Put the two things together. AMEX eliminates customers frequent flyer
> miles by closing their cards, then repackages those "lost" frequent
> flyer miles to citibank for better loan terms. Highly illegal it
> would seem.
>
> I reported my findings over 3 weeks ago, but the story has not lifted
> off, yet.
>
> Join my Chase Bank / credit card industry protest at www.Daily-Protest.com
>
>
> This is not the time to be raising everybody's interest rates nor
> is it the time to Change Terms and not allow a customer the right
> to "opt out".
>
> The first three respondents are uninformed about what is really going
> on.
>
> -Alessandro Machi

May 04 02:59 PM

[Alessandro:]

The person with 7 million miles traveled a lot. They just built up over a long period of time. The KCBS news expose also featured
another person, an attorney, who had 100,000 miles and the attorney also had their card closed and the miles forfeited. It took Joel Grover getting on the phone with the attorney for AMEX to reconsider.

It also took Joel Grover to get the person with the 7 million miles a three month window of time to use their miles.

The story ran in Los Angeles on KCBS.


On May 04 02:59 PM DonFurio wrote:

> I know Amex has many different cards, but I was pretty sure they
> have Amex points, not miles. Why would someone not use the 7,000,000
> miles or points they had, and if someone really had that many miles
> or points, I would think they make sure everything was on the up
> and up.
>
> To the author, I'm sorry you had such a negative experience with
> Amex, but I have to wonder why you don't have several different credit
> cards unless you have a balance. If Amex were to try and deny a
> purchase, why not use another card? I'm sure it's frustrating to
> you that they didn't treat you with more respect given your history,
> but since credit cards are un-secured debt, they have to react as
> quickly as they can. I agree what they did was excessive, and I
> would write them a letter and I would also see if there is any other
> credit card companies that can better serve your needs. Unfortunately,
> the people in their phone customer support probably don't understand
> enough to help you. If you do pay your bills on time as you mention,
> why not set up an automatic payment?
>
> On May 04 01:55 PM Alessandro wrote:

May 04 03:40 PM

[Spook:]

Wow, I thought I should feel terrible when AMX called two weeks ago asking for a verifications and proof of capability to pay, I have the traditional green debit card, but faxing them a photo copy of my income statement for tax filing, a passbook from my saving is not sufficient, they still want more proof or they cancel my card which I provide additional saving information from 2 other bank.

Here in Taiwan, AMX is more courteous than Citibank.

May 04 03:45 PM

[Alessandro:]

Here is a link to the Joel Grover article about what AMEX is doing.

www.nbclosangeles.com/...

Please consider joining my protest against the entire Credit Card industry. www.Daily-Protest.com


On May 04 01:55 PM Alessandro wrote:

> American Express has been closing cards of their best customers,
> causing them to lose their frequent flyer miles, one customer lost
> 7 million miles.
>
> Joel Grover of KCBS reported the above.
>
> Then in doing my own research I discovered an article in which American
> Airlines is going to trade Citibank frequent flyer miles for better
> loan terms.
>
> Put the two things together. AMEX eliminates customers frequent
> flyer miles by closing their cards, then repackages those "lost"
> frequent flyer miles to citibank for better loan terms. Highly illegal
> it would seem.
>
> I reported my findings over 3 weeks ago, but the story has not lifted
> off, yet.
>
> Join my Chase Bank / credit card industry protest at www.Daily-Protest.com
>
>
> This is not the time to be raising everybody's interest rates nor
> is it the time to Change Terms and not allow a customer the right
> to "opt out".
>
> The first three respondents are uninformed about what is really going
> on.
>
> -Alessandro Machi

May 04 03:52 PM

[DonFurio:]

Do you have link for this? Even if you're credit card is canceled, there are numerous ways to save your miles if the airline requires activity every 12-18 months. Clearly the fault lies in the consumer not keeping up with the rules of a frequent flier program they have a big stake in. Besides, he must have really taveled a lot because the highest level of Elite at most airlines is 100,000 miles a year and even if you say he would get double miles for being elite, it would take 35 years at 200,000 miles a year to reach 7,000,000. If you say that it wasn't all traveling, but some from the credit card, I still don't think it adds up.

On May 04 03:40 PM Alessandro wrote:

> The person with 7 million miles traveled a lot. They just built up
> over a long period of time. The KCBS news expose also featured<br/>ano...
> person, an attorney, who had 100,000 miles and the attorney also
> had their card closed and the miles forfeited. It took Joel Grover
> getting on the phone with the attorney for AMEX to reconsider.<br/>
>
> It also took Joel Grover to get the person with the 7 million miles
> a three month window of time to use their miles.
>
> The story ran in Los Angeles on KCBS.

May 04 03:55 PM

[tom007:]

Face it folks.

Anyone who uses CC for a substitute for cash is asking for financial floggings.

You can't even read, much less understand the fine print, and they have the right to change to contract after you sign on.

I think the best advice is to SHUN AMEX and their ilk, get a CC from a local bank, and use it for car rentals and flights as needed.

The rest - pay in silver.

May 04 09:02 PM

[Alessandro:]

tom007,

I think at this point in time, most people would agree that having debt is worse than not having debt. It is time for solutions, not punishment that is being handed out by companies such as Chase Bank.

By the way, I tried commenting on Joel Grover's blog and they never posted the comment even though it mentioned the possibility of a huge frequent flyer miles coverup involving Citibank, American Airlines, AMEX and USAIRWAYS for starters.

www.daily-protest.com

Jun 29 03:37 PM

[Alessandro:]

It appears that the airlines do sell frequent flyer miles to the credit card companies in exchange for better terms on their loans.

So it is in these credit card companies interest to cancel frequent flyer miles, or make them next to impossible to use, and then reallocate lost frequent flyer miles to the credit card companies for lower interest rates on loans.

I could almost live with that (not really actually) as long as the credit card companies passed on lower interest rates to all of their customers, instead they are doing the opposite!

Please stay involved, don't just complain here, that is a great start but more needs to be done by all of us.

www.consumeraffairs.co...
www.bloggersagainstcha...
www.daily-protest.com
www.changeinterms.com
dailypuma.blogspot.com...

Jul 04 03:15 PM