Two Costco members claim that the budget retailer’s messy credit card swap stripped them of their American Express insurance with no warning.
Cheryl and Vic Matkovich lost their accident insurance when Costco ditched American Express and made Visa its official credit card issuer back in June, CBS Sacramento’s Kurtis Ming reports.
According to the couple, they received notice that their Accident Guard Insurance would be canceled two days after it had already been terminated. The Matkovichs say they were notified by Costco in a letter dated June 25 that they would lose coverage on June 23.
The couple’s Accident Guard Insurance policy was intended to provide their grown children with $150,000 each, in the event of a fatal accident. The couple began paying $21 a month for the insurance policy 12 years ago.
When the couple contacted American Express about the cancellation, they were reportedly told it was too late to renew or continue their policy.
Nancy Kincaid of the California Department of Insurance told CBS Sacramento that insurers must tell clients if they are going to terminate their insurance at least 10 to 60 days in advance, depending on the type of insurance. Soon after CBS Sacramento presented American Express with this information, the local news outlet says it received an email that the Matkovichs had been re-enrolled in their insurance.
It’s likely that the Matkovichs weren’t the only people whose insurance was impacted by the credit card swap. American Express told CBS Sacramento that enrollment to “certain insurance products” was disrupted in the credit card swap, and that former Costco card members who lost their insurance could continue enrollment using a different American Express card.
Neither Costco nor American Express responded to Business Insider’s request for comment.
The insurance blunder represents another speed bump in Costco’s transition from American Express to Visa as its credit card of choice. The move, finalised in June, affected 11 million Costco members who were required to transition from the TrueEarnings American Express Costco cards to the Costco Anywhere Visa to earn rewards through a Costco co-branded credit card. It also meant that customers paying with a credit card could only use Visa-branded cards, instead of exclusively American Express.
Following the transition, users threatened to cancel their Costco memberships because of initial and ongoing issues.
Many customers did not receive their new Citi Visa cards in the mail prior to the swap. Others complained after finding themselves unable to use corporate American Express cards at Costco. Some said that charges were mistakenly being flagged as fraud, and that the transfer of rewards dollars has been lower than expected.
Despite the complaints, Citi says the swap has been an overall success.
Citi reported more than 337,000 new account acquisitions to date since the switch — a number that significantly exceeded Citi’s expectations. Purchase sales on Costco Visa cobranded cards totaled $5.7 billion in the 3 1/2 weeks following the transition, according to Citi.
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