A couple of years ago, this writer penned a paean praising American Express, " Real people tout AmEx's stellar customer service." He did so because Miranda, a friend of his, who'd been a loyal cardmember since the 1950s, had suggested he should: Her experience had been extraordinarily good, and excellence should be recognized. Recently, he met Miranda again, and she couldn't find terms strong enough to express her contempt for the company. After five or six decades during which she'd never once missed a payment, she needed to spend more on her card than she usually does, but was told that her purchase of three trans-Atlantic airline tickets to attend a family funeral had already maxed it out. "No preset spending limit" doesn't mean no limit at all, and her previous modest spending patterns seriously disadvantaged her. Miranda was genuinely shocked and outraged that her loyalty, exemplary payment record and not inconsiderable assets appeared to count for nothing either to American Express's computer systems or the call center agent to whom she spoke. That single bad experience transformed her from a strong advocate for the card issuer into an equally vocal critic. When asked about experiences like Miranda's, Elizabeth Crosta, American Express vice president of public affairs, explained that the company sometimes had to change credit lines. "Our intent is to strike the right balance between accommodating our cardmembers' spending needs and, at the same time, prudently managing credit risk -- for us and for our cardmembers," she said. "To determine credit lines, we look at the customer's overall credit profile, which covers many factors such as overall debt levels, reported income, credit bureau reports and payment history with American Express, as well as other lenders."
American Express still greatOf course, AmEx has changed little over the last few years. It's launched new products and services, and no doubt it's upgraded its IT systems and restructured some of its departments. But its customer service ethos seems pretty constant. In August 2013, it topped the J.D. Power U.S. Credit Card Satisfaction Study list for the seventh consecutive year. It may well do so again when the 2014 results are published, although Discover is an increasingly strong contender.
But, in 2013, American Express had 80.8 million cards in circulation around the world. And it's inevitable among so many that some of the people holding that plastic are going, like Miranda, to be dissatisfied.
Credit card complaints onlineIt's a numbers game, and even the best can't please everyone all of the time. And that, you may think, is the only troubling aspect of a plan unveiled on July 17 by Consumer Financial Protection Bureau (CFPB) director Richard Cordray. Mr. Cordray wants to expand the federal regulator's existing public, searchable database of consumer complaints about financial products, including credit cards, to allow complainants to add their own narrative: to tell, in their own words, their stories. At the time of writing, there are more than 37,000 plastic-related complaints, but each allows only a brief (five words at most) generalized description of the issue to be shown -- alongside:
- The state and ZIP code of the complainant (but no other personal information).
- A couple of key case dates.
- The name of the card issuer.
- How the issue was resolved.
- Whether resolution was timely.
- Whether the consumer was satisfied with the resolution.
Lies, damned lies and statisticsYou can see how this volume of data is useful to the regulator. It can sort by each criterion to identify which issuers have what problems. Similarly, it's helpful for credit card companies themselves to see where their own and their competitors' weaknesses are. But how likely is it that consumers are using the database to inform themselves before choosing the cards they apply for? Relatively few would have the necessary IT skills to even sort the data, let alone the knowledge to put the results into context. For example, if right now you waded through the 2,500-plus complaints (resolved and current) about American Express on the database, you probably wouldn't guess that it's ranked top for customer service. And, unless you knew how many cardholders each issuer has, you couldn't judge whether a high or low proportion of its customers is unhappy.
Sunlight the best disinfectantAdding complainants' stories isn't going to help with this, although it should make the database more interesting. Every issuer is going to have many, many customers who feel aggrieved, and their narratives are going to contain what sound like -- and some almost certainly will be -- serious injustices. But will any consumer learn anything worthwhile from consulting it?
But maybe that's not the main point. Perhaps the intention is to shame credit card companies and other lenders into acting more ethically, and dealing with issues in a more timely way."With these powerful stories made available to the public, companies would have more incentive to address potential shortcomings in their businesses that are harming consumers," Cordray said July 17 in prepared remarks he delivered in El Paso, Texas. "The narratives should encourage companies to improve the overall quality of their products and compete more vigorously over good customer service." Card issuers are unlikely to welcome such negative publicity, but there are precedents. Already, the Consumer Product Safety Commission's SaferProducts.gov and the National Highway Traffic Safety Administration's SaferCar.gov provide official platforms for troubled consumers. Maybe shining some light on bad practices could raise standards across the financial services industry, and ultimately benefit lenders as well as consumers. In the meantime, Miranda has somewhere new to let off steam.