First let me say that I’ve been an American Express customer for many many years.  I have also been an investor in American Express (NYSE: AXP); through my 401k and direct investments.  Whenever I needed something, AmEx customer service always took care of me very quickly.  Customer service was always very personable and could generally resolve whatever issue I had in minutes almost without fail.  This is the main reason I’ve carried their card and the reason many businesses large and small depend on their cards.

Recently there’s been a massive change to the way American Express has decided to do business.  Not a single day goes by where I don’t hear a story about American Express leaving long standing clients high and dry in stores and restaurants by declining charges for no reason — later customer service to explain their fraud system thought the charge may be fraudulent even though the same person has shopped at the merchant many times over the last several years.

I’ve also heard of American Express slashing available credit to within $500 of balances without notice.  Handcuffing some of their best clients and destroying credit ratings because revolving credit usage shoots through the roof.  And then there’s the famous offer that American Express has been putting forward.  If a client agrees to pay down their balance by x, AmEx will throw in y.  Some deals have been for every $300 you pay down, AmEx throws in $50.  The deal also includes you having to close your account or a reduced credit limit — both hurting your credit rating.

I understand that American Express is attempting to mitigate massive risk with the new economy.  Write downs hurt.  AmEx like other banks will take beatings from the analysts once a quarter.  That’s just part of a public companies life.  But AmEx is getting away from what made them so great — customer service.  American Express was truly a service company that happened to offer credit cards and other services.

American Express card holders gloss over the annual card holder fees because all clients know they’re paying for unsurpassed customer service.  Whether you needed last minute show tickets, have fraudulent charges, lost your card and needed a next day replacement or need to get a ticket for a flight leaving in 10 minutes, they always managed to pull it off.  But now it almost seems like American Express is firing clients, some for no good reason, in an attempt to mitigate their risk.

I know of two Centurion clients (you know, those famous American Express Black Cards) who have decided to stop using their cards after 15+ years in lieu of their Chase cards.  This should be a big deal for American Express.  These clients are generating tens of thousands of dollars a year in merchant fees for them.

American Express.  You’ve put yourself in a really bad spot.  It took you years, maybe even decades to create a brand based on exceptional customer service.  And in just a few months you’ve tarnished your brand.  Your shortsightedness will cost you dearly in the long run.