AmEx bribes their way out of debt

by Cinda Baxter on February 25, 2009

in Business, Economy

amex_plat1It’s no shock to retailers paying vendor invoices with AmEx cards that the company is suddenly pulling back the reins on available credit. I know of several storefronts who have had their credit cut back-—or worse, cut off-—in spite of good payment history.

Well, get set. The consumer side is about to heat up.

According to Bloomberg News, AmEx is paying some cardholders $300 to voluntarily close their accounts and walk away. In theory, the move will lessen the risk of future defaults.

It’s not just the account that will go away, however. According to the company website, cardholders who accept the offer before the April 30th deadline may also lose their accumulated reward points and rebates. In retailer terms, this is the equivalent of getting paid without having to honor store credits earned along the way.

Membership may have its privileges, but to echo Heidi Klum, “One day you’re in, and the next day you’re out.”

So who gets the golden ticket? From the Bloomberg piece:

“This is an offer we made to select card members to incent them to help pay down their balance,” said Molly Faust, an American Express spokeswoman. She declined to say how the company picked which customers qualify for the offer.

Should be interesting to watch the reaction of über-retailers like Neiman Marcus who only accept the shiny member-only cards.

Karen February 27, 2009 at 12:05 pm

I will be most interested to see how this plays out. Having already closed my merchant account with AE over their refusal to acknowledge a customer had bilked the system I have no sympathy for them. Rather than support a merchant who did thousands of dollars in sales for their card each month, they elected to chargeback a custom order (which the customer acknowledged in writing could not be done) and allow the cardholder to keep the goods! Somehow that doesn’t sound like good business – but we were the ones out the money and the custom ordered goods. So maybe what goes around really does come around? Someone else might be protesting soon, and it could be AE.

Jennifer February 27, 2009 at 12:22 pm

What frustrates me is that AmEx is suddenly reducing our credit limit while demanding full payment on the relatively small balance (compared to limit before now) even though we’ve always paid on time an in significant amounts. At no time have we been upside down on the card with more due than what was open.

When we try to reason with them, there’s no one listening.

How can a retailer with good credit and good payment history who has never abused the system be the one pushed into a corner when consumer card holders are being offered money to pay their accounts and close? I just don’t understand this kind of logic.

Karen February 27, 2009 at 1:55 pm

Well Jennifer, as I said above, it seems to me that AE has ALWAYS been on the side of the cardholder and not the merchants that provide the services and goods for which cardholders pay. I can’t think of any instance in which they championed or even took care of the hand that fed them. And if they succeed in getting accounts to close ( and I am wondering if it is the AE holders or the Optima holders they are after) then how will they make their bottom line? I am trying to look into the future and see where they are heading. I think that having a credit card with a financial institution that holds the rest of your accounts is reasonable these days. A card that is in effect a line of credit is a good thing if you can find one now. With AE you have no collateral with them upon which they can base extending your card limit or even leaving it where it is now.
I wish that I had not had to cancel my cards with them (both personal and business and my merchant account) because it was a good thing. A charge card is always a good thing vs. a credit card if you have the cash to pay in full. It is a convenience. AE went a bit further when they Open-ed (pun intended!) and with Optima. They crossed the line into the world of credit and there were already some big players there.
We know about abuses in the credit end of the market. I don’t think that AE was immune and now they are trying to get themselves out of the collective hole.
Did I mention that NEVER was I able to speak with anyone higher up the foodchain than the person who answered the 800 number?? You would think that after it had all closed out they would have at least been curious as to why a merchant who had honored their card for 10 years called it quits ………..nope! And to add insult to injury, they keep sending me “fantastic” offers to open an account or sign on as a merchant. I just stuff the junk into their postage paid envelope and send it back!!

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