American Express Finds Its Customers Trustworthy

NEW YORK — “In customers we trust” might be an apt slogan for American Express. About seven months ago, American Express unveiled a purchase protection plan, which insures purchases made on the company’s 19 million credit cards for up to 90 days against theft, fire damage or loss.

Since the program began, the credit card giant has received about 75,000 requests for refunds and has made a number of refunds.

American Express will not say how many refunds have been made, but it will say that it has found very little evidence of fraud by consumers, said Morris Perlis, general manager of the company’s Personal Card Division U.S.A.

Under the American Express program, refunds of the purchase price are granted for damaged or lost goods provided the loss was not covered by other forms of insurance.

No Double-Dipping

This factor would prevent consumers from double-dipping--collecting from two sources for the one loss.

“We have procedures to ferret out cheats,” Perlis said when asked how the company can prevent customers from abusing the refund privilege. He added that those procedures have not been in great demand.

“Our customer base is one reason there is little fraud on the customer’s part,” Perlis said.

The customer base he referred to has an average income of $45,000 and a white-collar job.

“They have to pay their bills at the end of the month,” Perlis said. “And, typically, they have a high education level.”

In addition, Perlis said, American Express is fairly confident of customer honesty because of its tough selection process.

“We decline more applications than we accept,” he said.

A strange amalgamation of products came to American Express for refunds: shoes chewed by dogs, socks that sprung holes before much wearing, a decapitated talking doll and a camera that broke beyond repair when it was dropped.

Two Shirts Received

The company also received two shirts--one scorched during ironing and another stained by a leaky pen.

These items are just part of a huge collection consumers sent to American Express by cardholders seeking to nail down a claim. American Express has a warehouse full of such stuff, none of which can be repaired and must be junked, Perlis said.

A selection of items from the warehouse was on display in a conference room at Rockefeller Center when Perlis and other American Express executives--who showed little fear of losing their corporate shirts on the refund deals--branded the trial program a success and announced plans to extend it until the middle of next year.

Perlis said the future of the refund program has yet to be decided.

Virtually all retail items purchased with the American Express card are covered, up to a limit of $50,000 per cardholder. Not covered are cash or its equivalent, Travelers Cheques, tickets of any kind, negotiable instruments, animals or living plants.

Also, jewelry in baggage is not covered unless the baggage is being hand-carried by the cardholder.

Cardholders are also insured against most common mishaps, including accidental damage or loss.

As with many insurance policies, there is no coverage for loss or damage due to flood or earthquake, war, normal wear and tear, abuse, fraud, inherent product defects, radioactive contamination, confiscation by order of any government or public authority, risks of contraband, illegal activity or acts, or mysterious disappearance.