CHESSNOID

I have been getting a growing number of hits on my American Express posts on my blog. Many have shared their experiences of I have a high FICO score, never paid them late, loyal customer for many years, then POW they decreased my limit to my balance.  Why?  It’s because the economy is bad and the recession is hurting them just like everyone else. Check out my other posts to see the comments containing other peoples’ experience and I am sure the majority of you will fit the same category.

What’s new is that Amex is profiling where you shop to determine if you are a risk factor.  Shop at Walmart or Costco to save a few bucks and the alarms go off.  That really does sound wicked to me.  I am sure with today’s technology , it is easy to create a program to track where their customers shop and with a touch of a keystroke a segment of their portfolio has their credit lines reduced.  I am not kidding.  Check out these 2 MSNBC articles:

Mortgage meltdown to hit credit card users

“Consumers are probably not accustomed to that but we live in a new world,” said Carol Kaplan of the American Bankers Association, explaining the new caution among lenders. “(Banks) have suffered a lot of losses and they are doing whatever they can to reduce risk. They have people that work all day and all night who try to come up with new formulas to assess risk.”

Some elements of those formulas might surprise you. Few consumers would consider the credit limit implications of the stores they shop at — and in fact, they can’t, as American Express wouldn’t tell MSNBC.com which stores it deems as “risky.” Still there’s nothing illegal about the practice, and with losses mounting, it’s not surprising that card issues are resorting to new tactics.

In the first quarter of 2008, banks charged off 4.7 percent of credit card loans, a 33 percent increase from the first quarter of 2006, according to the Center for American Progress. That timing is no coincidence; that’s when easy credit for home equity loans dried up. In 2009, according to consulting firm Innovest StrategicValue Advisors, banks will charge off nearly $96 billion in credit card debt, double the projected 2008 losses

AmEx rates credit risk by where you live, shop

“Absolutely unbelievable!” said Jesse Gilleland of suburban Washington, D.C., who says revisions of his American Express accounts and credit limits, at least partly for those reasons, could force him to close his once-thriving computer-consulting firm.

A letter sent to Gilleland by American Express, one of the nation’s largest credit-card issuers, includes these reasons why the spending limit on his Platinum Card was reduced:

* “Our credit experience with customers who have made purchases at establishments where you have recently used your card.”
* “Our analysis of the credit risk associated with customers who have residential loans from the creditor(s) indicated in your credit report.”

Credit-card experts and consumer advocates say that while such practices have been rumored for some time, this is the first time they’ve seen them cited as criteria for a credit limit reduction.

I must say this is incredible. Can you imagine calling customer service and inquiring about the reason for your credit limit reduction.

CSR: “because you shopped at a discounter like Walmart or Costco which in our profiling program means you are no longer part of the elite upper class because those are all middle or lower class establishments.”

YOU: “I am offended so please cancel my card.”

CSR: ” too late sir/madam, there is a program that cancels all your accounts with us automatically if you call us to find out why we did it based on your incoming phone number”

This is actually legal for them to do. Just like it is to profile where you live. It happened to me and you can read it here Recession is forcing American Express to reduce credit lines for no reason and here Recession forcing American Express to target profiles to decrease credit limits:

But, she said, “We are looking at some other factors, too, in light of the economy. We are looking at consumers holding subprime mortgages (and) those living in areas where there has been a greater deterioration in home prices.”

She could have been more exact and said California, Arizona, Nevada, and Florida or said the top 20 foreclosure cities.