“Important Account Price Change Notification” was the title of the letter that American Express sent to certain cardholders last week. “Change”, of course, is usually a euphemism for “increase”. And this letter was no exception.

They were announcing three rate increases: on finance charges for cash advances, on finance charges that have a penalty rate on them because of a late payment, and on late fees. The latter, incidentally, is going up to $39 on previous balances of $250 or more.

The last item was a shocker, however.

*MOUSE PRINT:

Effective with billing periods that begin on or after October 1, 2009, the Over-limit Fee subsection of the Other Fees section of your Agreement is deleted.

Wow… no more over the limit fees on certain AMEX cards. Hey Citi, Chase, and Bank of America… did you hear that?

Freescore.com has just begun advertising (with Ben Stein as its spokesman) that you can get credit scores from all three credit bureaus free:

You will note that nowhere in this main panel above on their website  is there ANY disclosure about cost and obligation. “When you try FreeScore” does not communicate anything. And there is not even an asterisk.

*MOUSE PRINT:

*A refundable $1.00 processing fee applies.

And only when you decide to sign up for the “free” scores, do you learn the rest of the details:

*MOUSE PRINT:

Simply click “View Scores” on the next page to activate your trial membership in FreeScore and claim your Free 3-in-1 Credit Report and Triple Credit Score! To activate your trial membership in FreeScore, you will be charged/debited a $1.00 refundable processing fee and then you can immediately take advantage of the exciting savings FreeScore has to offer! After your 7-day FREE trial period it’s just $29.95 per month for FreeScore. Remember, you can call FreeScore toll-free at 1-800-316-8824 within the first 7 days to cancel, and you will not be charged/debited. Also, remember to ask for a refund of your $1 processing fee.

As with similar offers for credit monitoring services, you only get your “free” scores by signing up for a trial membership in a credit report access program for nearly $30 a month — a new high. (These things used to cost $79 a year, but without any credit scores.)

Their TV commercial is no better, and arguably worse:

*MOUSE PRINT:   For only about one and half seconds is a disclaimer on the screen in the tiniest of fonts that says “scores and reports free with trial membership in FreeScore.” There is no disclosure at all about a refundable $1 processing charge.

Trans Union is the provider of this service, and one would have thought the lessons that Experian learned (after the FTC went after them) would be apparent: you should be upfront on the website and say to get your “free” scores you must join a trial program for $1 and that it will cost you money if you fail to cancel within X period of time.

Have you ever heard of Ally Bank? Probably not, but it is being advertised very heavily these days.

What is your bank trying to sneak by you?, they ask. Fine print? Asterisks? Not Ally. They promise “no sneaky disclaimers ever.”

But who is Ally Bank? Clicking “the Ally Story” link on their website, reveals who they really are:

*MOUSE PRINT:

“We are Ally Bank. Built on the foundation of GMAC Financial Services”

When asked to explain that somewhat flowery language, Ally’s customer service department responded, in part:

Ally Bank was formally known as GMAC Bank. The launch of our new name was on 5/15/2009.

Ally Bank is a separate company from General Motors (GM). Ally Bank is a part of GMAC Financial Services, which became an independent company in late 2006. GM holds an equity stake in GMAC, but is reducing its ownership equity due to the federal requirements of GMAC becoming a Bank Holding Company. GMAC provides financing to automotive dealers and customers, but they do not directly finance GM. The companies have separate banking relationships.

So this is really GMAC Bank with a new name. So why did they change their name away from GMAC Bank?

” — We do not own gmac.com, and we do not own the “GMAC” name as it is leased from GM.

– We decided to invest in building a new brand, since we are going to increase our marketing of the Bank to raise retail deposits.

– Our research showed that GMAC brand recognition was largely limited to existing and past customers. We wanted a bank brand name that would have potential for eventual global growth.

– Perhaps most importantly, to launch a unique online bank with a unique customer offering, we felt that it was important to create a truly unique brand – one with a name that means something to the customer and speaks to our business philosophy of working with customers to make money, not against them.” –Manager, Global Marketing Communications

Or, just maybe people were reluctant to deposit money with what was better known as an auto finance company with the name “General Motors” in its title?

In any event, they have savings products that pay higher rates of interest than almost anybody. Their savings account currently pays 2.05% (down from 2.25% just last week), and they have a money market checking account paying 1.90% (limit six checks/withdrawals a month). The latter account also comes with an ATM card, and they will reimburse other banks’ ATM fees for the first four transactions a month, up to $6 a month. And, of course, individual accounts are insured by the FDIC for up to $250,000.

My mother recently received an email offer for an American Express SkyMiles credit card with the subject line, “Your Amazing Offer has Arrived.” Here it is:

The quick read indicates you will get “up to 25,000 miles”, which is divided into seemingly two miles deposits: 20,000 up front and 5,000 more if you add more cardmembers.

*Mouse Print: The additional 5,000 miles has an unexpected twist found in footnote #2.

2,500 bonus miles will be awarded to your Delta SkyMiles account for each approved Additional Card submitted with this application, up to a maximum of 5,000 bonus miles.

One might reasonably have assumed that adding a single additional cardmember to your account would have triggered the extra 5,000 miles bonus.

On the same day that my mother received this offer, I also received an email entitled, “Your Amazing Offer has Arrived.” Here is what mine said:

So, I must be twice as amazing as my mother since I was being offered 40,000 miles instead of 20,000 (as she has no one to give another card to).

This is a terrible slight on my mother, who is a saint. In fact, she has been dead for three and half years.

Consumer advocates have always advised the public to cut expired credit cards in half so they could not be used for fraudulent purposes by a garbage-picking crook. Following that conventional wisdom, however, is no safeguard that your full credit card number will not be stolen and used.

Here is the left half of an expired American Express card:

With only half the number showing, even an enterprising crook could not use it to make a purchase. However, that is only one side of the story, so to speak. Turn over that half of the card:

*MOUSE PRINT:

The back side of the card reveals a small engraved number that represents the second half of the card number. (The leading “7″ duplicates the last number visible on the front of the card.) And, note to crooks, the number on the reverse side has been altered so as not to jeopardize the real credit card number.

With the full credit card number visible, as well as the cardholder’s name, a clever crook could surmise the expiration date from the portion showing, and could potentially use the card to make online purchases. (Amex’s four digit security code, however, is not visible, and should a retail website ask for that information, this card would be rejected.)

When asked to comment on this security issue, and in particular why they issue cards with such an obvious security flaw and whether they were going to change the card’s design, a spokesperson for American Express responded in relevant part:

“I’m following up to let you know that we take the security of our cardmembers’ information, as well as fraud prevention, very seriously and have a number of sophisticated monitoring systems and controls in place to detect fraudulent card activity. We are constantly evolving these techniques to adapt to the changing activities of fraudsters.

We have learned that the best way to approach fraud prevention is from a holistic perspective. This means preventing fraud both on the consumer and merchant side of the transaction, looking at physical features of the Card as well as security information only the true Cardmember would know about the account. I cannot discuss specifics on this since the techniques would no longer be effective if we made them public.

One suggestion is for cardmembers to protect their personal and account information by shredding documents or cards before discarding them.” –Manager, Public Affairs & Communications | Risk, Information Management & Banking Group

Lest you think this is only an American Express issue, it is not. Below is the left half a Washington Mutual Visa card, front and back. The full credit card number is visible when putting the numbers found on the front and back of just that half together, as is the customer’s name and the security code. The expiration date can be discerned with a little guessing.

*MOUSE PRINT:

A spokesperson for Chase, which took over Washington Mutual said:

“Chase only prints the last four digits of the customer account number on the back of the plastic. So, as WaMu accounts convert to Chase, the plastics will follow this specification.”

This is not a new problem.  It does not affect all card issuers by any means, and not all cards of the above issuers are affected.  The practice of printing the full account number on the reverse side of credit cards has been going on for a long time, as this was a problem first noticed with some MasterCards about 15 years ago.

Does your card have all 15 or 16 digits of credit card number printed on the back?

The lesson here is to not merely cut your old, expired cards in half when disposing of them, but to shred them.  If you don’t have a shredder, just cut the card in a number of small pieces, and throw them away in separate garbage bags.