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American Express Axes Gift Card Fee

Move comes amid sharp drop in gift card sales

By Mark Huffman
ConsumerAffairs.com

October 1, 2009

But not to worry. From now on, American Express says its monthly fee is a thing of the past.

The company said it is eliminating monthly fees on all of its gift cards, including those now in stores, those headed to market for the coming holidays, and those already purchased that are in consumers' wallets and purses. The change is effective immediately.

American Express sees this move as a transformational event because it says consumers don't have to worry about using the card quickly. The monthly $2 fee in the past meant that the gift card lost value every month until it was used up.

American Express says it is the only major issuer of universal, or "general purpose," gift cards to eliminate all fees after purchase, which consumers can only hope becomes a trend.

"Customers told us that monthly fees undermine the value of gift cards, plain and simple," said Alpesh Chokshi, president of Global Prepaid, American Express. "We believe this sets a new gold standard among gift cards and provides a win for consumers and our business. With today's announcement, recipients now have a gift card that's 100 percent gift, 0 percent fees."

Consumers have not only been telling American Express how much they despise the fees, they've filed more than 170 complaints with ConsumerAffairs.com about the fees and related problems.

American Express says its gift cards now have no fees after purchase -- no fees for activation, no fees for checking a balance, no fees for monthly servicing, no fees for card replacement, and the funds on the cards never expire.

The fees aren't the only problems customers experience with the cards, however. Many of those who write to ConsumerAffairs.com say the cards are declined for obscure reasons.

"NEVER, NEVER, NEVER, NEVER" are the words I am using to describe the American Gift Cards to my friends, acquaintances and anyone standing in line within the sound of my voice," wrote Saundra of Upper Marlboro, MD. "I have been embarrassed numerous times trying to use these cards. ... As long as I have a mouth to talk, I am telling everyone to leave the American Express Gift Cards alone -- they are not worth the hassle and embarrassment.""

Saundra and others complain that their gift cards -- or, even worse, those they buy for friends and family -- are repeatedly declined even though they have adequate value remaining to cover the disputed purchase. Efforts to resolve the issue are often unsuccessful.

What brought on American Express' change in policy when it comes to fees? Perhaps the market made it necessary.

Gift card sales were weak during last year's holiday season as consumers, shocked by the sudden drop in the economy, chose discounted items as gifts, rather than spending on gift cards. Sales of gift cards are also expected to be weak this season, down as much as six percent, according to some retail forecasts.

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