MBNA's card switch irks some customers

Shift to American Express has an `opt out,' bank says

December 09, 2004|By NEW YORK TIMES NEWS SERVICE

When Patrick F. McIntyre received two American Express cards in the mail last month, he did not feel as if he had been welcomed into an exclusive club. Instead, he felt like a pawn in the credit-card industry's latest gambit.

MBNA Corp., the issuer of the Visa credit cards that McIntyre and his wife had carried for 14 years, switched his account to American Express without his permission, he said. He likened the tactic to "slamming," the practice some phone companies used in the 1990s to steal away their competitors' customers.

By the time he recognized what MBNA had done, he said, the bank had deactivated the McIntyres' Visa cards, leaving them with American Express cards that are not accepted at some places he regularly shops near his home among the Adirondack Mountains.

What MBNA did to McIntyre and has been doing to many of its customers in the past few weeks is not illegal, as slamming is. Still, he says, he is planning to file complaints with the attorneys general of New York and Delaware, the home state of MBNA.

Other cardholders have also been surprised to find that MBNA has switched their credit-card accounts from the Visa or MasterCard payment systems to cards issued by MBNA's new partner, American Express Co.

MBNA has trumpeted itself as the first bank to strike a deal to issue American Express cards.

The Supreme Court cleared the way for that arrangement in October when it decided not to overturn lower court rulings that the Visa and MasterCard networks could not bar their member banks from affiliating with competitors such as American Express.

MBNA announced last month that it had handed out more than 300,000 cards with the American Express logo.

Louis J. Freeh, MBNA's general counsel, said in a brief interview that the company was taking a "comprehensive" approach to marketing the American Express cards to make up for the 30 years during which it could not offer an alternative to Visa or MasterCard.

In some switches, terms are essentially the same, but in others MBNA says the new cards carry a lower interest rate than those they are replacing.

MBNA spokesman Jim Donahue said customers who do not want American Express cards can decline the switch or have their accounts switched back. "We will continue to employ a range of tactics," including opt-out notices, which, he said, are widely used in the credit-card business.

The unsolicited switch comes as cardholders are increasingly complaining about being surprised by tactics employed by big banks, including sharp rises in interest rates on existing accounts and changes in payment due dates. Most of the biggest issuers of credit cards now have policies that allow them to raise card rates to 28 percent or more if a cardholder is late with any payment, including his rent or a car lease.

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