October 11, 2007 - If you had a credit card from Macy's and it was recently converted to a MasterCard without your permission, you are not alone. Nearly 3.5 million other Macy's cardholders are in the same boat.

The new MasterCard's, issued by Citigroup, were only sent out to Macy's cardholders who hadn't used their account in some time. Citigroup also owns the Macy's card; something which most cardholders are probably unaware of. It completed the purchase of Macy's credit card business in 2006.

Not surprisingly, a number of people who have received the new MasterCard accounts are not pleased. Citigroup's action raises concerns having to do with privacy. The move may also be a violation of the federal Truth in Lending Act which bars companies from issuing new credit cards when consumers don't request them.

Citigroup appears to be skirting the law by canceling the original Macy's card accounts and claiming that the MasterCards are actually just replacement accounts. To bolster their claim, the company sent letters to cardholders earlier this year informing them of the switch and giving them until August 10^th to either inform Citigroup that they didn't want a MasterCard or to make a purchase using their Macy's card.

But many cardholders didn't get the message. That could be because Citigroup never clearly spelled out what they were going to do. In fact, according to one account published on Boston.com, the supposed explanation letters came in an envelope that was marked from Macy's Credit Services and read, "Coming soon to Macy's card members: A whole new card with more benefits than ever." Clearly, the message said nothing about MasterCard or the fact that the original Macy's accounts would be closed.

It is fairly clear to ACCESS that the actions of Citigroup are nothing more than an attempt to get dormant cardholders to use more credit. Unfortunately, the methods used here may actually have harmed cardholders. By closing out the original Macy's accounts and issuing new accounts, the consumers involved in this switch will have the average age of their open credit accounts reduced. This could result in lower credit scores.

by Jim Malmberg

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