CardHub.com released a late payment study today that revealed a flaw in the way American Express communicates late payment status. We found that American Express is communicating to its customers that they are 25 days more past due than they really are. While this is undisputable and proved by a screen shot of my own past due account, many calls and e-mails to American Express’s customer service team, and even admission from the Public Relations team that this is a ‘nomenclature’ issue, an American Express spokeswoman characterized our study as ‘erroneous’.
The spokeswoman said, “We are not out of sync with the industry and you are providing an erroneous report to your readers.” However, it is difficult to understand how she could come to this conclusion when American Express has come up with a unique definition for ‘past due’ – a term that is otherwise clearly defined and universally understood to mean the number of days past the due date (this was the case for all other issuers in the study). At American Express, however, the spokeswoman explained that ‘past due’ refers to the aging of the account and is counted from the time the bill is generated, not the due date for the bill. The last thing that we need right now is for American Express, or any other bank, to come up with their own self-serving definitions for well defined and widely used industry terms.
This inflated past due status raises further questions about whether this was a calculated strategy. As The Consumerist suggested, perhaps American Express used a definition of past due that was most advantageous for them in terms of making sure that customers would pay their American Express bill before their other bills if they were worried about the severe past due status of their American Express account.
To American Express’s credit, the spokeswoman said that she has raised this issue internally and is working on changing American Express’s past due message from saying an account is 30 days past due when it is really only 5 days past due to a message that simply says “This account is past due” or “This account is seriously past due”.
While I think it’s great that they are working on changing the way they are communicating past due status to their customers, it does not change the fact that their current policy is misleading and inaccurate. Since they are clearly taking this problem seriously internally, they should not be responding to reporters by saying that this is erroneous information.
Miscommunication of past due status is a serious issue because past due status seriously affects your credit score and the affordability of your credit. Because of its impact, it is important that the information that American Express’s customer service communicates around this issue is accurate. Unfortunately, due to the confusing terminology used at American Express, we found that their customer service is just as confused as their customers. My hope is that they will sort this out internally before any regulators have to get involved. Until then, the only thing that is erroneous is the message they are communicating to their customers.