Why does AMEX make returned payments so difficult?
 

SO I recently made a payment to my AMEX plat with the wrong account.
"Oops, no big deal" the agent tells me. We will refund you the returned item fee when it hits and off you can go.

Except that isnt apparently how their system goes. Because I put a stop payment on my checking account (so AMEX's system doesnt try to hit the account 3 times before giving up), my card account is apparently "on hold" indefinitely UNTIL AMEX account service agents conference call with me and my bank confirming everything is fine and dandy with everything next week. Two agents confirmed the same thing is true.

Why does Amex do this? Over the course of several years, I have had a few NSFs to various cards, (due to too many checking accounts and sloppiness on my part) but nothing ever comes of it besides the fee. Never had I had to conference with my bank to confirm things are correct or the funds have been withdrawn.

Knowing AMEX, I am half expecting an FR and/or account closure to come of this, despite nothing being overdue and employment info being up-to-date.

May be a combination of things, but the NSF items are probably a big flag.

Amex would use algorithms to sort through tons of data points. Things like stop payments and NSF cheques may correlate with default.

It doesn't matter "why" American Express has these policies, but dishonored payments can be a big problem. Here are some previous threads to help you understand how seriously they take it:

http://www.flyertalk.com/forum/ameri...storation.html

http://www.flyertalk.com/forum/ameri...-accounts.html

http://www.flyertalk.com/forum/ameri...-cc-offer.html

http://www.flyertalk.com/forum/ameri...concerned.html

I had this happen to me three years back. I didn't delete my 401vegas account from the website. I freaked out because a maker was coming in and the two would conflict. Whats worse? Pissed off Casino or a pissed off AMEX.

I called, they said the same thing to me - don't worry and I will note your account now if it does bounce. I did not get punished, did not get 3 attempts, just one bounce for the AMEX. What I did do was immediately pay from the correct account and it was a PIF and it was before the statement closed.

Perhaps my situation being different is why they didn't punish me, but it was my mistake not theirs.

Additionally I called the cage and told them what I did and in the event of a NSF that I would immediately handle with them.

AMEX is both really good and really annoying with this. On the good side is that they'll try payments up to three times, most other lenders do not do this. However, during the re-presentment process your card is indeed blocked until AMEX can call your bank and verify that the funds are now available to clear.

Note that it is not technically a returned payment until after the third failed attempt. This is what causes the big red flags and often causes them to close accounts. With other lenders, once its returned the first time that is it. Note that if your payment is initially returned as "Account Frozen/Closed" they will not try twice.

Another thing to keep in mind is that after even one payment issue (such as being returned once and clearing on the second attempt), they are likely to start putting payment holds on your account. This can be very annoying as you have to call them, then have a conference call with your bank, to clear the funds.

While I understand the need for there to be some risk management involved, it would make sense for them to not remove the payment from the balance until, perhaps, the second attempt. In today's day and age, with debits, check holds and everything else, I'm sure it is very, very common for payments to return once in error then clear upon the second try. What makes no sense to me is blocking the entire card. If, for example, I have $5000 credit available and a $100 payment bounces due to an error, why block the whole card (in addition to every other card I have with AMEX) and not just remove the $100 from the available balance?

In my case, I make a ton of payments (5+/week) and they oftentimes they'll hold every payment for the last 14 days without notice, even when these payments were not previously held. It is a very stupid, annoying and dumb process. This requires you to wait until business hours to have AMEX call your bank to verify that the past X payments have cleared. Then, after verification, if you make another payment the following day, their system will place all of the payments back on hold and you have to restart the process.

If you don't have sufficient funds to cover a $100 payment, you also don't have sufficient funds to cover a larger payment. transmitting payments for funds that are not already in you bank account is a genuinely poor practice.

USCTrojan83-You may fit a profile of a crook doing a "bust out" by making many payments and/or over paying. In the old days there were people who actually looked for this behavior but I bet Amex has a computer program now and you may be triggering the program. Easiest to stop a payment hold would be to raise your credit limit and/or make less payments

While I don't disagree with this at all, I'm simply saying that in the online/mobile payments world people make payments from the wrong checking account all the time and blocking a card for a voluntary payment does no good. It'd be one thing if the payment was for the whole credit limit amount or the account is past due, that's fine. AMEX is the only lender that does this, rather than simply subtracting the total amount of the returned payment from the available credit.

"Bust outs" tend to be with newer accounts, which is why AMEX tends to have these types of holds on newer accounts for larger unusual payments that are outside your normal pattern. In my case, I've been a cardholder for 10+ years and despite $50-60k/monthly charges, they won't raise my credit limit to a sufficient amount. It's annoying and requires a lot of payments. Basically as soon as charges post, I pay them down.

The whole thing makes a bit more sense on a revolver, where someone might make a payment, and AMEX instantly allows you to use that amount more on your card. However, this idea falls flat on its face when you are using a charge card. The few times I have tested approval limits on my card, its much higher than my monthly spend (think 3x or so). If I was going to crash and burn, I wouldnt bother making NSF'ing a payment before defaulting.

Perhaps they use the same risk model for both products, despite the fact that they are separate products with separate credit risks.