December 9, 2004
Some MBNA customers are getting a surprise in their stocking: a new American Express card that replaces their Visa or MasterCard. Not only is it sending out new cards without asking, it's deactivating the existing cards, leaving consumers with no choice about which credit card they use.
The reason for all this Yuletide mischief? MBNA is the first bank to strike a deal with American Express following the Supreme Court's decision in October to leave intact lower court rulings that Visa and MasterCard cannot bar their member banks from affiliating with Amex and other competitors.
MBNA is the first big bank to affiliate with American Express and says it issued more than 300,000 Amex cards last month. While the terms are generally same, some customers are unhappy. Some say American Express is not accepted at stores they frequent, while others complain that the change forces them to notify vendors who automatically bill their cards for subscriptions and recurring purchases.
MBNA says it will accommodate customers by allowing them to switch back to their previous card. Also, MBNA points out that in some cases, American Express cards carry a lower monthly interest rate than the Visa or MasterCards they replace.
Some of the cardholders who've been switched received so-called "opt-out" notices in the mail but apparently did not read them.
Some consumers who've complained about the switch have what are called "affinity cards" -- credit cards bearing the name of a university, service club or other organization that gets a percentage of the proceeds from the customers' use of the cards. MBNA says not to worry -- the American Express cards issued to affinity customers will continue to benefit the affinity partners.
American Express, meanwhile, is trumpeting the change as heralding a new era of competition in credit cards and notes that its cards traditionally carry more "privileges" and "rewards" than most Visa or MasterCards.
While it may not be a good marketing tactic, the unilateral switch is apparently legal. There are no laws that specifically prohibit, in the way that long-distance slamming or local telephone bill cramming are outlawed.
