American Express: "We Can Yank From Your Bank Automatically" Clause? Not Quite

The Consumerist has a story on its site suggesting that American Express has added an ominous clause that allows it to yank money automatically from our banks as part of the Electronic Funds Transfer (EFT) section of our credit-card agreement. Not so fast, Consumerist. The new disclosure is much ado about nothing.

From the Consumerist story (story link here):

AMEX just sent out some new changes to terms of service for some customers, and one of them has us scratching our heads in particular. There's various increases in APRs and fees, but then under "In Case of Errors or Questions About Your Transactions" they're now adding "You authorize us or an agent to debit your Bank Account for this amount." What scenarios would qualify under "errors" or "questions"? Don't like the sound of agreeing to let anyone make withdrawals on my bank account without myself pulling the lever.

Let's get to the bottom of this.

If you go to the "In case of errors or questions" portion of the ETF section of your American Express agreement, you'll find that the new language doesn't change anything. The change takes place in the final paragraph of the ETF agreement. The new language must be inserted after the third sentence.

These are the three sentences that come before the new sentence that American Express wants us to insert:

If we determine that there was no error, we will send you a written explanation within three business days after we finish our investigation. Upon your request we will provide you with copies of the documents that we used in our investigation. If we have provisionally recredited your Bank Account during the investigation and determine that there was no error, we will notify you of the date on which we will redebit your Bank Account, and the amount to be redebited.

Those are the three sentences. American Express is saying that if it has already RECREDITED your account -- but later finds out that it was in error -- it will take the money back. It will notify you of the date in which that redebit will take place. That's the old disclosure.

Now add this to the disclosure: "You authorize us or an agent to debit your Bank Account for this amount."

See what I mean? Totally a nonstory. All that American Express is doing is saying that you agree to let them redebit your account. Customers had already been doing that. Indeed, American Express has always notified customers of the date in which this redebit would take place. And this new sentence does not change that. American Express MUST still notify you and tell you what date the redebit will take place. It was just implicit that American Express customers would authorize American Express to "debit your bank account for this amount." American Express's new disclosure just makes something that was implicit -- explicit.

There is no story here. I enjoy the Consumerist (and Ben Popken), so I'm not taking a shot at the site or its author. Just pointing out that the Consumerist and its readers have nothing to worry about regarding the new American Express disclosure.

It's much ado about nothing.

Please let the Consumerist know.

Editor's Note: Turns out that the Consumerist has written a follow-up story, citing my work. Ben Popken (an all-around good guy) has posted the story here (link).

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