Credit Cards

Macy’s and Citi Cards Cross the Line

Comments 22 Comments

After 6 years in the credit business, you start to get used to credit card companies occasionally burning customers by raising their rates or instituting crazy new terms. It’s not often that a credit card issuer will do something so bad that it gives even a hardened credit expert pause.

If you haven’t already heard: Macy’s agreed to give Citi access to their inactive (24-48 months without a purchase) cardholders. Citi used this opportunity to mail out letters in July to the users notifying them  that, unless they opted out, they’d be getting a new Citi card in the mail. The cards are starting to hit now and the story is surfacing. Consumerist.com has the best details so far.

It’s fairly common to see retail cards transfer to ownership with a larger bank. For example: your Nordstrom card may become a Nordstrom Visa through Chase. But in these cases, the tradeline record on your credit report is just updated. This Macy’s/Citi situation doesn’t follow that pattern. Instead of the card transferring, they’re actually closing one account and opening a new one.

This is a particularly low blow and a very weird marketing strategy. Using an opt-out mailer as an opportunity to establish new accounts? Without verifying addresses? Sure, they can legally do it under the fine print of the consumer terms agreement but this is definitely a step too far.

From a credit score standpoint, the impact of these new accounts could be severe. Your credit score could be harmed by:

  • The closure of the old Macy’s card. Especially if the card was one of your oldest or one of only a few card you had open.
  • The inquiry for the new Citi card. This will remain on your credit for two years.
  • The opening of the new Citi card causing your average credit account age to drop.
  • The new Citi card having a lower credit limit than the old card.

Even if you close the Citi card as soon as you receive it, it’s possible that the account has already been reported to the credit bureaus. Closure won’t delete the record, it will still remain on your credit history for 7 years.

Are you a Macy’s cardholder whose account was closed and replaced with a Citi MasterCard?  If so, we’d love to hear your story. Post your comments below or send an email to emilyblog@credit.com.

Emily DavidsonCredit.com‘s Communication Director and former TransUnion credit expert. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Anonymous

    Interesting. Macy’s all of the sudden decide to start reporting on my credit report at about the same time. I’ve never had a Macy’s account so I disputed it, of course. But, I have had a Citi account, years ago. Perhaps it’s a coincidence?

  • Rachel

    You make it sound like Macy’s sold their customers’ information to Citi. Are you aware that Macy’s accounts are owned by Citi anyway?

  • joshsmit

    Thanks for posting this. I am in fact a victim of this. I had a macys card which was closed more than a year back- a fact that was confirmed even on my credit reports. And suddenly about 2 weeks back, when I retrieved my credit scores, I found a credit inquiry on my account which was not initiated by me from Citibank. I called citibank and after my call got transferred a couple of times, I was informed about the macys replacement card. This was outrageous, they were snooping into my credit file when I did not actually apply for a credit card – and infact it was reflected on my credit file as me applying for new credit – and this too when I was in the process of a refinance. Well they told me on the phone call that they cancelled my card. Wait a few more days, and lo and behold a citibank card arrives in the mail!!! I called them again and they reeled out the same garbage about macys-citibank.
    I am wondering if I have any legal recourse since citibank did access my credit file without me having applied for credit from them – especially since I was going through a refi and it could have affected my rates ?

  • Christie

    I received the Macy’s card when Macy’s bought out Lazarus. I never used the new card. So now, I get the Citibank card. Their explanation?–> Some people wanted more purchase power than a department store card could deliver. Now my credit report shows I opened and immediately closed a major credit card. Is there any legal action that can be taken?

  • JC

    My mother is a horrible victim of this transfer. She can’t speak English well, and before I knew it she’d activated her new Citi account from Macy’s. She thought it was just a replacement. From looking at the mail, I would have came to the same conclusion. I sensed sometime fishy, so we called the number on the card. Sure enough it’s not a Macy’s card any more, but they assured us that the card was just a “transfer, it doesn’t close or open any account. It should not effect the credit score”. If the article above is true about closing and opening accounts, I think we have an false advertisement. The reason why I am commenting on the article is because I believe there could be a fine print somewhere that contradicts their verbal statement. I guess we’ll see when she checks her credit score. Whatever the outcome, I am disgusted by both companies.

  • deweydog

    I posted the below to another site but thought I would repost here as this looks more current. Make sure to call the 2 people from citibank I have listed below – if only to waste as much of Citibank’s time as we can.
    I too recieved this unsolicited mastercard and to say the least I was not happy. I have spent quite a bit of time on the phone to Macy’s and Citibank with numerous front line persons and supervisors/managers etc…
    Citigirl, you say to be curteous to the CSR’s on the phone but I have a hard time doing that when I get disconnected intentionaly 3 times in a row when I ask to speak to a supervisor. Once may be a technical glitch. 3 times is intentional. Guess what – when I am sitting in front of the TV with nothing to do, I call up Citibank and make the person explain it (again !) and then discuss it with them for as long as possible and then I ask for their supervisor and repeat the process. I do this on a regular basis – it’s fun and like I said, I am just watching TV so it’s added entertainment and wasting Citi time and money :-)
    As people mentioned and I said to the Macy’s and Citi employees I talked to, from a very technical standpoint this may be legal but do you truly want your customers to be this unhappy ?
    As far as I am concerned, Macy’s and Citi have no repect for my privacy or credit record.
    As I said to more than one employee, what if someone took this from my mailbox and had a good time for a month until I got the bill for a credit card I didn’t even know I had ?!
    Or even more plausible, what if one (or more ?)of the 3.5 million people receiving this card realize that they could have a friend activate the card, have fun for a month and then say that they never received the card.
    The sad answer to this is Citi probably does not care. Fraud is seen by these companies as a cost of business to be passed on to you and me through higher interest rates and fees.
    I urge anyone not happy with this to let Macy’s know they will not be a customer any more. This is one of the few ways you can influence their behavior.
    I went down to the local Macy’s twice and spoke to the store manager’s and all they wanted to do is basically argue.
    I have contacted my state’s attorney general and they said they have had other complaints and do not regulate Citi as the feds do but they have a question in on the issue.
    I am contacting US Senators and Representatives in my state.
    I urge others with concerns to contact the same in their state.
    I do have contact info below for 2 Citi employees – I urge everyone to give them a call – they would love to talk to you !! :-)
    One said they are an assisant to the president of Macy’s – Mellisa 800-264-0069 ext 2425
    The other is an executive in customer service at Macy’s – 423-477-6844 if no answer hit 0 to get his assistant. He said he is contacting the credit bureaus to have the record of my Citi account removed so if you want that done, give him a call. If only a small percentage of the people who received the card call him, we can keep him busy for a while – at the very least, tying up executives costs the company money :-)

  • Linn

    I received a CITI mastercard today. After checking on the internet I found out it was supposedly because I had an inactive Macy’s card. I never had an Macy’s card -but one from Hechts Dept. Store which Macy’s bought out.
    I called the CITI number given to CANCEL the card.
    I called Macy’s customer service to complain and they verified that it was from the “old” Hecht store charge account. I told them I was very unhappy and so were a lot of other people I had been reading about on the internet who also received this CITI mastercard. The representative apologized, but then defended Macy’s actions. I told them they were going to lose a lot of business because of this. I hope they do and that this practice can be stopped.

  • Anthony

    This one negatively affected my family as well. My mom has an old Macy’s store account, which I helped her CLOSE 2 years ago because she didn’t speak English too well and I don’t want her managing credit paperwork. Imagine my surprise when she asked me to check out the new Citi card sent to her this month, despite the fact that her account was CLOSED. I don’t know for sure if this was a deliberate act, the Macy’s to Citi data transfer may have gone imperfectly, but still it’s irksome.

  • Terry Quinn

    Subject: Received Citi credit card without request.
    We recently received a mailed, unsolicited credit card. Not an application for a card, but an actual MasterCard card. The literature with it said “If we do not want the Citi MasterCard, call 800-432-0282 and we will close your account.”
    The card was issued by Citibank South Dakota. In the enclosed prospectus, it was signed by Ken Stork, President & CEO, Citibank (South Dakota), N.A., P.O. Box 6000, Sioux Falls, S.D. 57117.
    At the time, we called CITI on another number, got a human, and asked them to close that account. We were told that they did not show the account as on file, so we should disregard and destroy the card. I asked not to be contacted again, and they said that she would OPT us OUT. But while waiting, the call disconnected.
    I just called the 800-432-0282 number, and got an automated system for closing the account. After asking us to enter the credit card number, the system asked me to confirm the account closure, and when I did, it said the account would be closed in 5-7 days, and the card would not be useable in that period. It then closed the conversation.
    Shortly after we received the card, my brother (who is retired from the consumer credit industry), told me that what they had done was illegal, that they cannot open a credit account without my authorization. He also recommended that I contact the Illinois Department of Financial Institutions and they would pursue this.
    I have filed a complaint with that department.
    Terry Quinn

  • JP

    How can you find out whether Citi issued you a card without paying $50 for a 3-bureau credit report from myFICO? I’ve had a Bon Marche account since the mid 70′s. Chain was bought by Macy’s a few yrs. back. Rarely used the charge account. Now live in semi-rural area where mail is often stolen from mailbox (so I have sensitive stuff sent to a PO Box). Was I sent a card? How can I find out?

  • Steven_J

    This action by Citi/Macy’s DOES INDEED adversly affect one’s credit rating. My 15 years of credit history suddenly became one month of Citi credit history overnight – Citi’s argument is that this does not show up as a hard inquiry – WHO CARES?!a new inquiry is not what the damage is all about – a 5-point inquiry ding, I could stand BUT – the conversion just erased 15 years of positive trade lines on all three credit reports! There’s the problem Citi/Macy’s! If this were a conversion as Citi/Macy’s claims, then why not allow the consumer to keep the previous credit history? Your conversion has eliminated any trace of my previous Macy’s credit history – which could mean a death-blow to folks with a low average age of accounts – a HUGE – factor in FICO scoring.

  • Stephen_J

    Answering JP – you can request a free report (not score) at each of the big-3 CRA for free if you believe you were a victim of fraud – which, IMHO you may well be in this case – you may also be entitled a report by checking here:
    http://www.annualcreditreport.com/

  • Steven R

    I just received the Citi card and am outraged that Macy’s and Citi pulled this kind of garbage on me and others. I have canceled the Citi card and called Macy’s to let them know they have forever lost me as a customer.

  • jfn

    My score dropped 23 points because of this little stunt. I sent Terry Lundgren’s new wife, Tina, an email to give to him expressing my anger. Her email is: tinask8judge@yahoo.com if it is still active. Let Lundgren how up[set we are

  • jfn

    You could also call Vikram Atal CEO of Citi card division at home at:
    212-879-2155 or mail to his home: 525 E. 80 Street, 10F
    NY, NY 10021

  • Laura

    About 2 months ago, I decided to take a look at my credit report to make sure everything was ok and to see if my score had changed. This is when I noticed a new “CITI” account. At first I freaked out because I thought I had been a victim of identity theft. I started googling the name of the account and found out what had happened. I am so mad that Macy*s did this to us. Not only did they close our existing account (causing a credit report point drop), but they allow CITI to open a new credit card without our knowledge? This is outrageous! I called Macy*s and told them that I never received this card (which my credit report says was opened Aug. ‘07) and that I will never shop at Macy*s again. I work in a well known medical practice and I have also told all of my patients this story, and they do not plan on shopping at Macy*s again. We are screwed either way because if we close the account our credit score will drop, and it has already dropped because the closed Macy*s account and the opening of the CITI account. I have STILL not received this card and I keep getting every excuse from the Macy*s customer service center. I hope something can be done to fix this, and soon!

  • Attorney Richard Shenkan

    GOOD NEWS!
    I am a CONSUMER RIGHTS ATTORNEY and would like to speak to anyone who has experienced this problem.
    Please call me right away at (412)716-5800 or e-mail me at rshenkan@shenkan.com.
    No charge nor obligation of any kind.
    I may be able to help you correct your credit-related issue and also receive money.
    Richard Shenkan

  • Michael in SF

    I am having a heck of a time with CitiCard and have decided to take them to Small Claims Court here in California. Does anybody have the name and address of who receives their legal process?

  • Thank You JC

    Thank you for the info. . it really helped me out!

  • http://profile.typekey.com/emlipson/ Elaine Lipson

    I just cancelled my unwanted Citibank MasterCard, sent to me to “replace” my Macy’s card. I’m outraged at this unethical behavior. Because I was a responsible user of credit, I’m now penalized by this incredibly sleazy company, which of course I have to help bail out with my taxpayer dollars. These people are criminals and thieves. They have no ethics. How can we combat this?

  • L.S.

    Folks! It gets worse!!! I am a full time masters student who works part time and I got sucked into the CITI card thing about a year ago. They told me that the card was from Macys and that it was to replace a past credit card that I had with Robinsons May prior to their closure years ago. Being that I am a student, I jumped on the opportunity to have the card. HOWEVER, CITI took it upon themselves to close my account just last month 12-08 without any notice whatsoever! This company and all the others are playing GOD with people’s lives and they NEED TO PAY 31.99% back for every dollar they have been stealing from the people with these absurd and unannounced rates they are jacking us with! And with the job market as horrendous as it is, these jackasses are making it even more difficult to get hired due to their screwing with our credit scores, because employers may not hire someone who does not have a glowing credit report. When does this maddness end????

  • lolafolana

    How many of you have Macys VISA credit cards. If you do you need to be aware that even if you keep up with your credit card payments with them, if you miss a payment with another company Macy’s will lower your credit limit because they look at outside credit. I have other credit cards and as long as I keep my payment with them, they don’t care about what happens outside. My ability to pay them is what is important. Withi so many people being laid off, losing their houses, Macy’s comes a long and penalizes you for having life challenges. Macys needs us. If we don’t shop at their stores, they won’t have to worry about lowering our limits. Crazy, what they are doing! Give me your thoughts and let’s see how we change this with out congress person or making it known to Macy’s that we won’t stand for it.

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now
X

Stay connected to our experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.