Update on the American Express Financial Review

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A few weeks ago I posted about the unexpected Financial Review that American Express required my mom (aka Grandma Points) to go through if she wanted to keep her Amex account open.  It was unexpected to us as she is not a real card churner, has only one Amex card, does not use it heavily, doesn’t make any unusual purchases, etc.  She did add four family members as authorized users in August 2011, and has been in discussions with Amex about their not honoring multiple referral bonuses she is owed for referring others to the Premier Rewards Gold card (back when the only way to get the 25K sign-up bonus was by being targeted or getting referred).  So, who knows if either of those played into the review.  It has certainly been anecdotally reported that having multiple authorized users can increase the chances of a financial review.

The first notification of her financial review was discovered online when her account displayed as “Charging Suspended”.  A few days later, a letter came in the mail giving official notice of the review.  Thankfully she wasn’t somewhere that she was relying on her Amex to pay for anything, because it suddenly wouldn’t have worked.  She was given five business days to respond to their request for a completed 4506T form (Request for Transcript of Tax Return) that would allow Amex access to some of her tax information such as her reported earnings.

My mom was upset by the way the Financial Review was handled.  Had Amex called her directly when her card was initially suspended, instead of her finding out by logging in to the account, it might have set things off on a better foot.  Admittedly, it probably also didn’t help that the review came in the middle of her trying to fight for points that legitimately Amex owes her (which we are still fighting for).  She does understand and respect Amex’s right to review the finances of those that they provide credit to, but the bad timing, and the way it all started made it sting more than it might have otherwise.

In the end she did decide to comply with the review, in part because she wants to keep fighting for the points Amex owes her (go Grandma!), and also because she wants to continue a good relationship with Amex so she can take advantage of other great deals in the future.  Hello, Amex SPG…..  She faxed in the required form that they sent her via email.  About 7-10 days later she received a letter in the mail that stated her credit line had been capped at $9,300, but that her charging privileges had been reinstated.

The income she stated in her initial application would match what was found on her tax information.  I wonder why Amex doesn’t just place charging limits on cards to start with.  When they go about it in this somewhat backwards way, it can leave a bit of a bad taste in your mouth. I only have one charge card that isn’t from Amex, the Chase Ink Bold, but when I applied for it I was told that I had a $10,000 charging limit.  That was fine with me, and it seems to be a much simpler process to get that out of the way upfront than what Amex has in place.

The few takeaways we have from this Financial Review are:

  • American Express Financial Reviews can and do happen to potential anyone.
  • Your first notification of the review may be when you log in and see a big red “Charging Suspended” written next to your account or your card may just suddenly stop working.  I guess that is a good reminder to never travel without cards from at least two banks and access to cash.
  • Once the review starts you do not have very much time to comply.  It would help to know in advance of a possible Financial Review if you plan to comply or not, because if you take a few days to think it over, you aren’t left with much time in the event Amex comes back and says there is something wrong with the way you filled out the form.  That last thing you want is for your account to display as “Closed by Issuer” because you simply ran out of time to get Amex what they needed.  So, add your response to a Financial Review to your list of things to ponder as you lay falling asleep in your bed at night.  😉
  • A likely outcome of the review is that there will be a limit placed on your charge card.  This isn’t just my mom’s experience, but that of several others I have read about/communicated with as well.
  • The process took several days after she faxed in the form, so don’t expect your charging ability to be instantly restored when you fax in the required form.  If Amex is the only card issuer you have, it might be wise to add at least one other bank into the mix as a back-up.

So, at the end of the day the good news is she survived the Amex Financial Review!  I figured that this was a good time to write this update since I know many people just got in on the one-day 75,000 Membership Rewards offer for the Amex Business Gold Card.  I hope that none of those new Amex cards will lead to Financial Reviews, but in case they do, at least you know the relatively happy ending to this Financial Review story.

 

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Comments

  1. I am a firm believer that Amex has every right to perform financial reviews, but the way they handle it is very poor. I agree a simple explanatory phone call is the least they could do. I have no idea how Amex lets this happen the way it does. With regards to spending limits, grandma should not feel hard done by there we all have charging limits on our cards they are just not made known to us. At least grandma knows. There is a “check your spending ability ” feature on the web site and using this to test different amounts I was able to work out roughly what my limit was

  2. Good to hear. Sounds like not a big deal (as long as you’ve been honest and comply). Just curious, did the AUs also have their cards frozen? I have an AU helping me meet spend on an AMEX DL Reserve. Not a big deal for me if my card gets frozen but it might annoy him. 😀

  3. I wonder what Amex will do when a large portion of the income listed on an app does not appear on one’s tax return. This can happen even when the app is 100% accurate as filed, since income from IRAs, 401(k)s, and asset appreciation (such as stock increases) don’t usually show up on a tax return until the asset is sold.

    If Amex wants taxable income, they should ask for that. That is not the same as Household Income, however.

  4. Great update. MP-I appreciate the fact that you don’t sugarcoat the potential risks or hassles involved in the points arena.

  5. I have 25+ AU cards left over from Small Business Saturday. Should I cancel these to reduce my risk of FR?

  6. Yikes. I agree it’s not necessarily the fact OF the FR, but the (lack of) communication methods and the very tight deadlines that are disturbing.

    Lots of people don’t keep up with their emails or other communication methods everyday, especially when traveling.

  7. FR at AmEx is serious. Many of us got FR’ed after the authorized user big bonus. (25?!?)

    My concern is the unknown at Chase which seems to be starting to do something of the same when they perceive their exposure is high.

  8. I have NO complaint about AMEX performing FR. I think any financial institution should be prudent in loaning money. Had the banks done their due deligence, it would not be such a big mess in the housing bubble, short sale, foreclosure etc. Many people LIED on their applications in getting a mortgage.
    If I were AMEX, I would do the same thing, giving people 7 days or so to comply. Because time is of essence if they suspect any fraud. They want to shut it down quickly. I dont think we can blame them for it. Remember no one will say ” I am a FRAUD”. It is up to AMEX to do his due deligence.
    As to people “ooh ah” on Chase, remember Chase is new to this, and hasnt established much pattern. Give Chase sometime, and you will see AMEX is within their rights when it comes to lending you money through credit cards.
    to Sam (comment # 3)
    Household income does NOT include appreciation of assets. The appreciation you mentioned in IRA, 401K is part of NETWORTH.

  9. @Phil, I agree that the manner that they handle FR’s (or at least this one) isn’t ideal. She has no hard feelings about the credit limit. She has never charged anywhere close to that on this card anyway. 😉

    @HikerT, all AUs on your accounts are frozen during a FT. It’s a total freeze. It did work out fine in the end for her, but FRs aren’t something I wish on anyone.

    @Sam, I’m not the income/tax expert, but I suspect if the stated household information on the application varies significantly than income reported on taxes then they may have cause for concern and would likely at least adjust the spending limit accordingly.

    @Steelsnow, I agree!

    @Baxterboy12, I’m not much of a sugar-coater (well at least for things like this). 😉 As for your question – 25 authorized users!! I can’t say for sure, but I would imagine that can’t help your chances with avoiding a FR.

    @MJLouise, agreed.

    @tassojunior, yeah, time will tell what develops at Chase. Moderation and honesty go a long way in the credit card churning game….in my opinion. 😉

    @Jo, I think most agree that Amex has every right to conduct a FR. The process, however, is questionable.

  10. “I only have one charge card that isn’t from Amex, the Chase Ink Bold” – did you cancel the Sapphire Preferred when the annual fee came due?

    • @Larry, I just one one charge card that isn’t from Amex. I have many other credit cards, including the Sapphire Preferred. I will likely be keeping that card past the first year.

  11. If AMEX canceled your family cc because of FR, they still owe you referral fees, if anything they may owe you punitive amounts (depending upon the state) if they are evading paying these offers by using FR. MR pts may be their property but their putative value belongs to you!

  12. Glad things worked out with the financial review. – I as well had to go through the financial review process with American Express. I was overseas and tried to use two different American Express cards. – When I went back to the hotel and logged into my account I saw the cards were suspended. Although I complied and still have all of my cards, it did not leave a good taste in my mouth for American Express or the financial review process. But then again, what do I do? I want those points! 🙂

  13. I am just finishing up an AMEX financial review as well. I did a large transaction on PayPal which triggered it. I won’t ever buy anything through PayPal that is that large of a transaction again!

    It really was not as big of a deal as the internet and google would have had me believe. I have 3 AMEX cards, all frozen. They asked me to provide information on the current and 6 month average balance in 2 checking accounts. Since that information was satisfactory to them, they are in the process of unlocking the accounts. If it wasn’t, I would have had to provide tax returns, which would have been fine by me.

    I just don’t like the way it happened – a suprise on a Friday night, and I couldn’t speak with a representative until Monday! So that was bad, but once I was in touch with my rep she was more than pleasant to deal with and it has been ok, if not irritating.

  14. I no longer like AMEX. This just happened to me today. Just a little over a week before Christmas. Bills always paid on time and in great standings. Now all my automatic charges from the pharmacy and other bills are in jeopardy till I get through this. I have to change payment cards on over 11 different accounts that will charge to AMEX this week alone.. and that is if they get this done with in the 5-7 days they say. I do not care for them now!

  15. So if you fail an Amex review, you loose all of your MR points correct?

    What about Starpoints and HHonors points that you earned from Amex cards? Since those are in your SPG and HHonors accoutns already, Amex can’t take those correct?

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