CHESSNOID

OK, I just read this today on the Wall Street Journal but if you read my American Express blog post with many comments on them with similar experiences, then you know this has been going on for some time.  This stuff happened to me in February 2008.

Eventually it will probably happen to you, if it hasn’t already.  Here is an excerpt from the   the Wall Street Journal article.

More and more consumers are getting to the cash register to find that their credit cards have been canceled without their knowledge. Consumers say that it is often embarrassing to have a card declined in front of friends and other customers, and that it is frustrating when customer service is able to confirm only that the card was canceled, but not why.

But while it may seem to be bad form, in some cases, it is legal for a credit-card issuer to close an active account, like Ms. Horowitz’s, and notify the cardholder, or send out a letter, after the fact. Even when closure notifications are received before a consumer experiences card denial at a register, letters can be lost in mailboxes, as consumers shuffle through piles of junk mail. Those who have recently changed addresses or are traveling are often left in the dust.

Although the law governing notification of account closures is nothing new, its effects are increasingly being felt by consumers as card issuers try to curb their own risk in an uncertain economy. It is unclear how many consumers have been hit by instant card cancellation, but cardholders at AmEx, Bank of America Corp., Citigroup Inc. J.P. Morgan Chase & Co. and HSBC Holdings PLC also say they have recently had their active cards canceled before they received notice.

No Warning

An issuer can cancel a credit-card account without notice when …

• A customer hasn’t used the card in more than a year.
• A customer has defaulted or is delinquent on the account.

• An issuer can cancel an account and send written notice within 30 days after the cancellation when …

• A reassessment deems the cardholder too risky.

When Lane Gold’s HSBC Cash or Fly Platinum MasterCard was turned away at a Hoboken, N.J., sushi restaurant in April, he feared the worst. “You start thinking of everything bad that could have happened,” Mr. Gold says. “Was the number stolen? Is it fraud?”

It wasn’t fraud, he learned after calling customer service. He was told that the bank had canceled his card and that it was “reassessing risk,” he says. He has never missed a payment, monitors his credit score and doesn’t carry a balance on any of his credit cards, he says. He ended up paying with another credit card at the restaurant.

If an issuer cancels an account due to customer inactivity, default or delinquency, notification to the cardholder isn’t required, according to the Equal Credit Opportunity Act. However, an issuer is required to notify consumers about an account closure if the issuer terminates it based on other factors, such as information from a consumer’s credit report. In these cases, like Ms. Horowitz’s, written notification is provided within 30 days of—not necessarily prior to—the account’s being closed.

Just another reason why the Obama administration should not have BAILED out these corrupt companies. These companies should have been allowed to go bankrupt instead of paying their executives over million dollar bonuses!! Just say no to these fraudulent bailouts!! The Federal Reserve and US Treasury can’t even account where every dollar went or was spent. Why is that a mystery?