Economics for One

Are You Ready to Give Your Tax Returns to Amex?

American Express has begun demanding that some of their customers send in copies of their personal tax returns or face a cancellation of their account.  These US tax returns are then sent to India for review.

Customers who refused to send copies of their personal tax returns to American Express have had their accounts closed with prejudice.  They lose any reward points they may have accumulated, are required to immediately pay off the balance of any revolving credit, and have a negative report sent to the credit rating agencies, which results in a drop in their credit score.  If they fail to immediately pay off the revolving credit in full, they are sent to collections and face additional penalties.

“Do You Know Me?

In many cases, these demands have been sent to cardmembers of more than 20 years, who have never missed a payment, or carried excessive balances.  These are not delinquent cardholders.  They are ordinary people with accounts in good standing who were simply customers of the wrong company.

For years Amex held out that it was not a bank, and so it was not subject to the same regulation as ordinary banks.  This allowed them to offer financial services (including credit cards and investment products) which would not ordinarily be possible at a bank, and without the unpleasant government oversight.  However, when the banks were being bailed out, Amex changed their tune and applied to become a bank, in order to get bailout money.

It’s pretty reasonable for Amex to want to reduce their risks.

But it is also reasonable for consumers to want to reduce their own risks.  And choosing a vendor who may suddenly make unreasonable demands under threat is a risk many people may not want to take.

You have a choice of what company to use for credit services.  Choose wisely.  Choose someone else.

Posted in Article | 2 comments

2 Comments so far

  1. Mike Harmon April 25th, 2009 9:45 pm

    I discovered your homepage by coincidence.
    Very interesting posts and well written.
    I will put your site on my blogroll.

  2. rick April 25th, 2009 11:14 pm

    Thanks! Glad you enjoy it.

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