General Michael Flynn posted a letter to his social media account showing accounts being closed by Chase next month due to ‘reputational risk’. There was one thing odd about the letter – the first name it was addressed to had been blacked out. It turns out Flynn’s credit cards weren’t cancelled. It was his wife’s accounts being closed. And, amidst a backlash, Chase is re-opening them.
Chase now says the letter was a mistake,
A Chase spokesman would not comment on what caused the ‘mistake’, but said: ‘We’ve contacted our customer to let her know that we made an error and we apologized for any inconvenience this caused.’
Rapid Travel Chai shares in the comments a story about a family mmeber having their accounts closed by Chase recently. They’d started spending a lot more on Chase cards, but once they explained that they’d moved their primary spend over from an American Express card Chase re-opened the accounts, he said.
There are several things that can trigger a bank to be concerned about doing business with you.
- Here’s one thing that looks a lot like fraud. Your spending patterns might make you look like a bust-out risk. You’re a good customer for awhile and then you start spending a lot all of a sudden, your circumstances might have changed and you could be using up your credit prior to a default.
- “Reputation risk” cited here is something banks may be concerned about for their own sake (how would it look if their card was used to purchase materials for a terrorist bombing) or more likely to assuage regulators. The federal government leans on banks over whom they do business with – it’s not merely enough for a customer to be acting entirely legally, regulators might not be able to ban guns for instance but they can pressure banks not to do business with those who sell guns due to ‘reputation risk’.
American Express will put you under financial review usually rather than unilaterally cancelling your account. It comes as a surprise and the ability to charge gets suspended. In some ways the processes are similar, but the letter to General Flynn and to Rapid Travel Chai’s family member didn’t say that it was possible to appeal the decision – even though in both cases the closures were reversed.
Weird, because now everything is back to square one and Chase suffered reputational damage anyway. Brilliant stuff.
WHO. GIVES. A. S#@%!!
C’mon Gary, this is supposed to be a TRAVEL site and there is zero overlap. I worry this moron is some kind of hero of yours….?
What David said
@David: Conquest’s Third Law – “The simplest way to explain the behavior of any bureaucratic organization is to assume that it is controlled by a cabal of its enemies.”
When Chase assists cartels with money laundering, they never worry about their reputation.
In response to Sean — with whom I deeply empathize — I would say Travel, Points, and Credit Cards.
Key to travel are those last two. And, key to those last two are the card issuers.
We have all seen articles on a range of web sites regarding the odd behavior of the card issuers. Seemingly unwarranted shut-downs being in that behavior.
So, imagine someone owns a “dispensary.” You know the kind to which I refer. Now, imagine that person having all of one’s credit cards canceled as the person is in a disreputable industry. Where might a card issuer draw the line for another person . . . in its sole discretion?
While the article might seem gossipy — and, I intensely dislike gossipy articles — I think Gary has exposed a threat to some business owners (and others) that has never crossed their minds.
Literally anything can be a “reputation risk.” Banks and card issuers can do anything at will once you sign that contract. People should not be deplatformed for having wrongthink. The sooner we have new regulations the better.
As I noted yesterday, ain’t like Jamie Dimon has a stellar reputation to begin with anyway…
@Sean
This is still Gary’s personal blog and he clearly has libertarian leanings. He constantly talks about hotels trying to enforce who can hold conferences there, because it is indeed a slippery slope once you start enforcing these things.
Chase was presumably doing the same thing here to general Flynn’s wife and as others have noted, that could very easily be used heavy handedly.
I work for this bank and let me tell you , it’s difficult when someone comes into the branch because Chase is ending there relationship. They say that they will not share info regarding the closure and it is irreversible. It can be devastating for some individuals and businesses. It is also tough being the face of these mysterious closures. Most don’t have a 5 star General or a platform to fight back either. The strange thing is we have some shady businesses who do weird transaction constantly and other who seem completely legit and end up getting closed out without explanation.
Ben,
Shouldn’t a self-avowed libertarian be all in favor of allowing companies the liberty to fire whichever customers a company may want to fire for any or no reason whatsoever?
Don’t for-profit corporations deserve freedom of association, freedom of expression, and freedom to try to buy elections and influence in government and beyond? Why would a self-avowed libertarian be against the freedom of corporations — including this corporate megabank — to begin or end associations with customers however the corporation wants?
I hate the “it was a mistake” B.S. explanation businesses keep using every time the take an action and later regret it. I seriously doubt this was a “mistake,” in that they knew what they were doing when they canceled the card and MEANT to cancel the card. They want to imply that it was a “mistake” in the sense of an error or bug in the system. In reality it’s more similar to waking up with a hangover and saying it was a mistake to get drunk the night before. Sheesh — just own it.
It seems that wokie employees within the bowels of these giant financial institutions are going thru card holders unrelated personal opinions and posts ” seeking whom they shall devour”, like the zealous religious inquisitions of 300 years ago, few were found pure enough to escape being, burned at the stake including the” Inquisitors” themselves.