American Express decommissions business line of credit products without adequate notice

[ View Notification Letter ]

Much to the inconvenience and continued frustration of its customers, American Express recently announced that it is decommissioning two major products: the Business Line of Credit and Business Capital Line Program.  Both products will no longer exist beginning January 15, 2009. 

In untimely letters to its customers, American Express cites the reason as increasing focus on its core set of products. Afterwards, the letter proceeds to outline new terms for all accounts. 

Devastating effects on small businesses

As mentioned in previous posts, American Express has notified customers of their abrupt changes in the worst way.

As a customer of the Business Line of Credit product, I too received this notification.  I received the letter dated November 13, 2008 well after Thanksgiving on November 28. As stated, purchasing capacity was reduced immediately and therefore, I could not make the appropriate adjustments.  Furthermore, any reward points gained would be forfeited if not redeemed before the January 15 deadline or transferred to another account. 

While decommissioning a product is no crime and well within the law, notifying customers after the changes have been made is perhaps just as criminal.  The letter directs customers to “provide alternate payment information to Merchants who may have this Account Number on file”.  It also states that no checks will be approved after January 14, 2009, but limits purchasing power immediately, therefore having almost the same effect.

Such methods of notifying customers can be catastrophic to a business and its reputation, especially businesses that rely on such products for temporary credit for payroll or operations.  American Express should know better. Hundreds, if not thousands, of small businesses are being choked by a once trusted friend.  We at least deserve the courtesy of a timely notification.   

Read the letter notification letter and let me know your thoughts. 

Comments

[Linda Patton]

Chase=Extortion

American Express has not gotten us yet, but Chase has. Our horror story is minor considering others experiences.

We received a telephone message from Chase telling us that our minimum payment was going up this month. They said they sent information in our November statement. If they sent it, I do not have it. I have the statement and there is nothing about it.

We received the bill a few days later (Jan 12, 2009) and learned that our minimum payment went up 246% and added additional “Service Charge*Finance Charge*” of $10.

We had a promotional rate for 3.99%. Now the Effective Annual Percentage Rat (APR): is now 5.67%.

I called Chase on Jan 12. I asked them to send us a copy of the notice that they allegedly sent in November. (The “Important News” in the statement is all about ads.) I have not received the notice.

I asked Chase why that did this. Here is the response:

It is all about the economy and “tough decisions had to be made. We are not making money from you. You have a low interest rate and so we are raising your minimum and adding $10 a month for services.”

Please note that we have a perfect payment record. They are trying to making sure that that won’t last.

I asked that we take the minimum down a little. Ah, here’s the kicker. They will do that but they want the interest up 4% to 7.99% for a while and they I can’t remember after that. I could not believe what I was hearing. So the options here are to double the interest rate.

He told me that they have the right to do anything they want.

I told them to cancel the account. He suggested that we not do that so we can “negotiate”.

I said “Negotiate what?” I already can see what they can negotiate.

Chase response: “Well if you can’t pay the minimum payment, we can negotiate the default rate.”

This is extortion pure and simple. And adding $10.00 to “services” is theft.

Is this the norm for American businesses? If it is legal, it should not be.

I sent e-mails to the White House, my congressmen, senators, Office of the Comptroller of the Currency, and Kathy Chu of USA Today. Only the reporter responded.

Thank you, Kevin for the forum.

[Srinivas Annadi]

First of all thanks to Johnson for bringing up the issue upfront.

I have had a bad experience recently with Amex. All of a sudden without any proper notice, Amex has raised my APR to 50% more. When I inquired, representative revealed that company wide policies have changed that resulted in raise in APR. After much thought, I gave another call on following day to ask the same question, this is the best rate we can offer you at this time and nothing we can do.

I have another friend who had the same experience. To his surprise, when he paid off the balance, his credit limit has reduced more than 80% and that affected his credit score.

By far Amex is bringing up unfair policies and demoralizing customers. I don't think, this sort of polocies are any good news to the Amex and/or credit industry. I personally feel this is the time ( Credit crunch, financial problems in the country ) where Amex should stand by the customers to build trust in its services.

I lost trust in them, so paid off all balances and threw away credit card somewhere in Iceland . If I am not wrong, most of the members are also doing the same thing.

[Roger Carter]

I own a small business and received the same "Dear John/no credit" letter from AMEX recently. That was bad enough.

Then AMEX went begging for TARP money and got a few billion. Wasn't the point of the TARP funds to free up business credit?

I'm a little confused.

But the beat goes on with AMEX.

This month I see they've shortened the grace period on AMEX payments by about 10 days. Has anyone else noticed this?

Needless to say, after 18 years of doing business with AMEX I am done. Forever.

It's like they want to go out of business.

AMEX - we hear you loud and clear. May the Grim Reaper enjoy picking over the bones of a once proud and valued American company. RIP

[Roger Carter]

I own a small business and received the same "Dear John/no credit" letter from AMEX recently. That was bad enough.

Then AMEX went begging for TARP money and got a few billion. Wasn't the point of the TARP funds to free up business credit?

I'm a little confused.

But the beat goes on with AMEX.

This month I see they've shortened the grace period on AMEX payments by about 10 days. Has anyone else noticed this?

Needless to say, after 18 years of doing business with AMEX I am done. Forever.

It's like they want to go out of business.

AMEX - we hear you loud and clear. May the Grim Reaper enjoy picking over the bones of a once proud and valued American company. RIP

[Maureen]

I got the same letter.........only NOT because of where I shopped. JUST BECAUSE!! I was not using their card and had no intentions of using their card because of the interest rate. The just removed over half of my credit. I ended up contacting the CEO's secretary in NEW YORK. She said their was no explanation. AMEX needs to GO DOWN!!=Fed Take Over. NO company should get tax payer dollars to be propped up and put it's borrowers through this. I think a great deal of these banks should be taken over just like in England then the party will be over. NO MORE PALM GREASING with OUR MONEY!!!!!!!!!!!! They should not be able to have it both ways! When the American people say enough it will change.Meantime these companies get a pat on the back and keep going.
It's one big disaster.

[Patrick]

I was not using my line of credit and what I found odd was that right after American Express charged my annual fee, they notified me that they are closing my account.

I did get a refund after calling but I wonder if they gave refunds to everyone else automatically?

[Harvey]

George your comment is off the topic!
Please reserve your comments to the letter of notification.

[George]

Julie, if you truly make $185,000 a year, why do you have balances on your CC's? You shouldn't be charging your infertility costs. If you can't afford to outright pay for them, you shouldn't have them. Does this mean that you can't afford a kid when it comes as well? Do you plan to charge charge charge when your kid comes, even though you make, ahem, $185,000??

[Spencer]

Why hasn't the U.S. government done something to stop American Express from this practice? In many ways American Express, a company who sought bailout funds, is contributing to the U.S. unemployment rate. Many small businesses rely on their business lines of credit to make payroll and pay their suppliers. American Express is only hurting itself with these practices.

[julie]

My husband and I got a love note from Wells Fargo last month stating they were a "risk based" pricing organization. Because we had a high revolving balance #we put our infertility costs on credit cards a few years ago# they were raising our rate from 13% #our highest rate# to 19.24%. If we did not close our account by Feb 6 our entire balance would be subject to the new rate. Logically, I thought, this is a mistake! Our credit scores are in the 700s, we make $185k per year and we have, in our 21 year relationship with Wells, have never made a late payment on any of our products with them #mortgage, line of credit and credit card#. The rep I spoke to told me that the decision was made purely due to the High balances. I told her that we had paid off 30% of that balance within the last 12 months. She said it was a business decision. I was furious!!!!

REVENGE!!!

We had a Tahoe that was paid off, so I went to my credit union, got a loan on it, paid off Wells. I still use the card and have the credit line "available" on my credit report, but I don't carry a balance!! We are also refinancing our home to get it away from Wells. Happiness for us! Our rate on the mortgage went down .375%, we've lost no credit available on our score and more of our debt is secured which helps our score. Thanks for the kick in the ass Wells!!

Problem though... What happens to the poor Joe that didn't have the resources we had?? They get screwed!

I work in the industry and know that every purchase you make on your card, the issuer gets between 1.03% and 2.70% of that purchase. So, they've made their money. They don't want to carry your balance!! Also, when they send the Signature cards, the platinum cards, the fancy rewards cards YOU think it's awesome, right? NOPE! It's their way to up the rate they make on the purchase - your merchants pay that rate, your prices go up! It's a total circle jerk! In the end, WE ALL LOSE!

[Elijah]

Thanks Kevin and I feel for you here. Let me breifly tell you what they did to me!

They did the same thing to me that they did to you, except worse!

They significantly reduced my credit limit NOT because of where I shopped (you decided to shop there) BUT because of Who bought my mortgage ( not a volunatary choice of mine).

When I pursued them like you have they told me that because Option One purchased my mortgage (this was done without my consent). I as a mortgagee do not have the option to decide who my mortgage company, who I originally get a mortgage with, may sell my mortgage to.

So Amex told me that their experience was that people who had mortgages with Option One in their experience were very likely to default and were effectivelty A bad credit risk. So they reduced my credit limit significantly to within less than $50 above my current balance.

I would be willing to bet that as a result of AMEX cutting your credit limit because you shooped at Wal-Mart that wal-mart sues Amex. History has shown that Wal-Mart doesn't allow any funny business or mistreatment from credit card companies.

Wal-Mart has sued (or threatened to sue) Visa and MasterCard in he past and won, or settled the case after the credit card compnay sent them millions of dollars to resolve the dispute. I smell a lawsuit.