Is your credit card being upgraded? Part two

July 28 2008 by Ellen Roseman

I did another column last Saturday on this issue (see my earlier blog post) and asked readers to respond. I got an earful.

Many CIBC Aerogold Visa cardholders are just waking up to the fact that they didn’t reply to the negative option marketing letters. Their lack of attention means they will get a new Infinite Visa card in the mail, whether they wanted it or not, and their existing Aerogold card will be cancelled.

The status quo is not an option for cardholders who failed to react in time. Either they get an Infinite card with a new number — or they can apply for a new Aerogold card with a new number. In either case, they have to switch all the pre-authorized debits they had linked to their old cards.

The interesting thing, which I didn’t know about, was the impact on retailers. Here’s the story from one who wrote to me.

With these upgrades, the Visa issuer (CIBC) can and does charge a merchant a higher percentage to accept this card. e.g. old Visa Card merchant was charged 1.75 % …new Visa Card merchant is charged 2.00%…. Go speak to some merchants and ask them how much more they are paying now to accept Visa with these changes…and there is nothing they can do about it.

And here’s what another retailer says.

I feel that “the other side” of credit card fees – i.e. the fees the merchant pays so that the cardholders get their points – does not get enough press. Recently, Chase Paymentech sent a letter to all merchants increasing fees once again (including for debit purchases). Which brings me to your column – the reason CIBC wants to switch cardholders to the Infinite card is that this card brings a higher transaction fee to the banks and Chase Paymentech. A little too convenient to my liking. Unfortunately, since Chase Paymentech controls Visa, Mastercard, and debit card transactions, we are all sitting ducks for this semi-monopoly. American Express is not an option, as their fees are even higher!

Check out the new Visa Infinite website and you can see the high-end image being promoted. This card, offered by TD and RBC as well as CIBC, is aimed squarely at the American Express target market. No wonder Visa is raising the fees charged to retailers. It’s what goes with being an elite card, such as Amex platinum.

MasterCard went public a year ago and Visa recently followed. Do you think their attempt to offer upgraded cards has something to do with their stock issues? Remember that they now have to meet expectations of shareholders for continuing increases in revenues and profits.

41 comments

  1. Gerry T.

    Jul 28 2008

    Regarding Rob McLeod’s comments from his lofty position in CIBC Visa: What a load of cobbler’s…
    Express switch ? My autopays were not listed… Nice one, Rob.

    Automatic upgrade? Total rubbish. I have no more “benefits” than the nice gold card. He says that this Black card has the same great benefits as the Gold card plus:

    1. insurance (Sorry, Rob, you at CIBC discriminate against old farts like me – I’m 64 and the insurance doesn’t apply to me…)

    2. concierge services (what are they anyway?) Never use ’em myself, I carry my own bags.

    3. additional purchasing power? What does that mean? Rob’s increased my limit and not told me?

    4. Free upgrade? Rubbish. My time’s not free – and I spent an inordinate amount of it with Visa Centre at 750 Lawrence West (Toronto), teaching someone how to speak English. (But I digress…)

    The whole thing is a bad joke, driven by CIBC’s losses on the ABCP market in the US. CIBC has to demonstrate that they are actively engaged in business. This changeover to Black Visa cards will show that they are busy…not generating any more revenue, but showing that they are busy.

    And get this. You talk to CIBC Visa and they claim that VISA itself is whipping this along. Not CIBC, but Visa. Rubbish. Other Visa banks are not doing this to their customers. Just CIBC.

    AND don’t claim this is a security issue, because if it were, CIBC would have delayed doing this churning of account numbers until such time as they were ready to place a “chip” in the card.

    Next up ? Yet another account change when CIBC deigns to issue a card with the chip in it….like Europe has been doing for years..??

    What we need is Aeroplan competition in Canada in the form of another VIsa bank or M/C bank issuing credit cards. Then we can truly thumb our noses at CIBC, for this high handed method of treating their customers.

    NIce try, Rob. I was born at night, but not last night.

    Have a nice day…

  2. Robin Curry

    Jul 29 2008

    We cancelled our CIBC cards today (all of them) and we’ve drafted a letter that will be mailed to the CEOs of CIBC, Aeroplan and Visa Canada. The first two companies have lost our business for a long, long time. Unfortunately, we can’t do without Visa completely, given what our lives are like.

    Rob (McLeod) – I appreciate that you are doing your job, but to post here and not acknowledge that some of your clients have reasonable cause to be upset is insulting. I’m sorry, but we just don’t read every letter from a financial institution that starts with “Congratulations, you’ve been pre-approved for …” or every insert that comes with our credit card bills. And if there is a notice telling us our credit card is about to expire on either of our last two statements, we can’t find it. CIBC’s practice may be “consistent with the industry” – but that doesn’t make it a best practice.

    I’ve started a Facebook group about this issue. Should be easy to find under CIBC/VISA/AEROPLAN/INFINITY.

  3. GA

    Jul 30 2008

    RBC is another bank ‘upgrading’ their Visa accounts without customer’s consent.

    I received a letter from RBC Visa in May, stating they were ‘pleased to announce’ my Visa card was changing to a Visa Rewards card. I called RBC customer service to let them know I was not pleased and did not want a ‘rewards’ card and was assured that I could keep my current Visa account.

    Two weeks later, I noticed at RBC’s online banking site that my card number had changed. I again called RBC and was told I did not have a choice, the upgrade was going through to provide better customer service. This is a common theme when banks want to charge more for the same old services.

    RBC also recently changed my chequing account from one that offered 25 debits/month for $6 to one that has 15 debits/month for $4. When I called to complain, I was told that not many people were using my type of account and that RBC did this to ‘increase customer service and satisfaction’. My only option was to switch to another account type carrying service fees starting at $9.95 (for the same service I used to receive) up to $30 a month.

    Since the account change, I have been charged for 10 ‘extra’ transactions per month at 50 cents each, bringing my fees up from $6 to $9 for my usual 25 trasactions. It’s not hard to see that the satisfaction is all on RBC’s side.

    To add insult to injury, all of my ‘extra’ transactions have been on third party ATMs, where I am charged $3 per transaction, $1.50 of which goes to RBC. So now I am being charged TWICE for the same transaction. I emailed RBC to complain and RBC responded that a transaction on another ATM was not deducted from my 15 per month allowance. Apparently RBC doesn’t think their customers can count to 25.

    In my last conversation with RBC, I had a customer service (?) rep try to convince me that I was not being charged twice, that these were two separate services, one charge for using the other ATM and one for my ‘extra’ debit. Funny that I only received my money once.

    Although this rep was sympathetic and agreed with my views, there is nothing these front-line people can do about bank policies, so it’s a waste of time to call RBC Customer Service. Our conversation ended with a suggestion that I consider switching to another bank.

    The suggestion of using RBC machines exclusively is not feasible, as there are none within walking distance of my home or business. So my choice is pay the bank or pay the gas companies to drive to the nearest RBC machine. These days, it’s hard to figure out which is the lesser of two evils.

    I was also told that RBC will waive chequing account fees for their ‘loyal clients’, but I was not eligible because my Visa account is not the right type — my investment account with RBC Direct Investing is not considered an investment account with RBC??? and I do not have a mortgage. This after 30 years of banking with RBC exclusively.

    For those readers employed by financial institutions, why can’t you see that there is a tremendous opportunity to gain new clients by implementing the types of accounts and services consumers want, instead of trying to increase your profits by gouging your customers?
    Stop the ‘introductory offers’ to lure unsuspecting new clients, stop trying to justify your self-serving policies, and put your resources into satisfying your existing customers.

    Judging by the comments here and on other blogs it’s obvious many consumers are fed up and would switch to banks who truly listen to their clients and are willing to provide the service they need at a reasonable price.

  4. TLD

    Aug 12 2008

    I second everything that people have said about this incident. What galls me is that they just cancel cards out from under you.

    It is summer for God’s sake … people are on holidays … can you inconvenience someone any more than you can by cancelling their only credit card!!!

    My wife and I are leaving CIBC over this one.

  5. WDC

    Aug 19 2008

    Glad I’m not alone but the tactics of CIBC raise all sorts of questions in my mind. If this is how they deal with long term customers, I’m not sure I want to be one.
    I spent 20 minutes with a manager of credit services on the ‘phone last night. He could not come up with much better than the party line from Ms. Freedman above. This burns me.
    I’m going to take a crack at getting some points or no annual fees for a couple of years. The worst that they can say is no (which is consistent with their negative option marketing philosophy…).
    Grrrrrrrrrrrrrrr

  6. Karen

    Aug 25 2008

    I just called CIBC to try to get compensation for the fact that our Aerogold cards expired in July ’08, so they sent us a new card with the same number and a new expiry date. I spent a couple of days getting all our PAPs up to date. The next day I get the letter that we will be receiving new numbers. Great.

    I don’t see why I should have to go through this mess of updating PreAuth information because CIBC was too slow to realize that valuable customers don’t want to update this information twice in one month.

    How much do you want to bet that I’ll also have to go through the 27-step process to set up automatic payment of my CIBC visa bill again, too? If I do, that’s it.

    Oh, and I couldn’t get compensation for all of the time I will have to waste for what is only their benefit. I was told that CIBC was doing that, but not any longer.

    I guess I will write to the ombudsman, yet again.

  7. Karen L

    Aug 25 2008

    Ms Freedman:

    You have stated above:

    “A VIP dining program

    Access to VIP lounges worldwide

    Enhanced travel medical insurance

    Hotel and resort privileges, such as preferred room rates and free upgrades ”

    I see on the CIBC website about the travel insurance, but nothing about Hotel and resort privileges, VIP Lounge access, nor VIP dining.

    If VIP dining is Advantex, we already have that with our current Aerogold cards.

    What are all these other wonderful benefits that CIBC does not list but you do? Perhaps you copied benefits from the US version of these cards?

  8. Marty

    Aug 27 2008

    Mary Giles is the VP’s name on the credit card upgrade notice I have. I phoned her at 416-784-8720 or her assistant at 416-784-8020 but so far no response. Perhaps if enough of us call and complain, their negative billing “product” will go away.

  9. David

    Aug 30 2008

    I came home from vacation to find that my Aerogold Card had been “upgraded” and was due to expire in several days, even though I did not request this.

    A call to the CIBC “Customer Care” (Ha!) Centre proved to be a frustrating experience. When I asked what could be done, an uncaring drone told me “you won’t like your options”.

    It appears that my card will expire momentarily, but it will take up to 30 days for the CIBC “Express” (Ha again!) Switch Service to notify my pre-authorized payment merchants of this. It is shocking to me that CIBC did not learn from the Rogers negative billing fiasco of several years ago.

    I would urge all customers to let it be known far and wide of this abhorrent business practice. All of the good will and corporate imaging that CIBC has attempted to achieve through the millions that they spend on advertising has been undone in one poorly thought out act of corporate greed.

    Heads (Mary Giles VP) should roll over this. After more than 30 years as a CIBC customer I will be moving my business to another bank.

  10. Karen

    Sep 8 2008

    I have tried several times to talk with CIBC Customer Service about my questions regarding this “upgrade”. However, they can only return calls once a day and I actually work for a living (that’s probably why they keep upping my credit limit).

    When I return the calls, I can only leave a voicemail. Then the nice lady calls me back the next day and leaves me a voicemail. Lather, rinse, repeat.

    I believe today is my last day to opt out of this negative option billing. I wonder if the fact that I’ve now spent two weeks trying to speak with a live human being about my questions is going to result in my being force-upgraded after all.

    It’s a nice trick: you can’t speak with the Ombudsman until you speak with customer service…but you can’t every really speak to customer service.

  11. Jim

    Sep 22 2008

    Recently, I have cancelled my PC Financial card. Their interest rates are usury!

    I had a balance of $1,200, paid $900 and was charged over $30 for one month on the entire $1,200 balance! The way I figure it, $300 with a $30 charge amounts to 120% per annum.

    Amazing how they can get away with charging interest on money that has been paid to them!

    This is illegal – and their customer service reps have no recourse other than cancellling the card. Disgusting!

  12. Eric

    Oct 15 2008

    Similar to PB and Charles, I too had my HBC account upgraded to Mastercard. It arrived in the mail one day, much to my surprise.

    I called HBC to cancel both my HBC Mastercard and HBC acounts, and the funny (suspicious?) thing is: they didn’t mind!

    Two weeks prior, I had called to cancel my Accountgard insurance on my account, and was subjected to a rigorous ‘save the sale’ routine from the operator. However, upon cancelling my accounts outright, I literally received, “Sure, we can do that for you. You want to cancel both accounts, right?”

    I assume that the only way they’d let an account go (especially one with a sizable balance on it) so easily is if they knew they were walking a fine line between the legal and the illegal.