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Tested by Fire: American Express Travelers Cheques

Travelers Cheques Lost in Fire; Family Goes Hungry

By Lisa Wade McCormick
ConsumerAffairs.com

January 22, 2007

Tested by Fire • House Fire Tests American Express Promise • Travelers Cheques Still Popular In Many Countries --- • More about American Express

They're touted as the world's safest currency. And guaranteed to be replaced "quickly and easily" if they're lost or stolen -- usually within 24 hours.

That's why a rural Kansas man bought thousands of dollars worth of American Express Travelers Cheques last year.

But the company, he says, refused to honor its guarantee. And that broken promise left him -- and his young family -- in dire financial straits after they lost $9,500 in Travelers Cheques during a house fire last June.

"I specifically chose to buy Travelers Cheques because the company guarantees them if they're lost or stolen," says Mark M. of Coffeyville, Kansas. "But now they've denied my claim because they say there's unsubstantiated evidence that there was a loss.

"This has caused great anguish for my family," adds the unemployed electrician who has a wife and 14-month-old twin daughters. "We've really had to struggle financially. I've even had to sell parts off my wife's van to pay for diapers for our twin girls."

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Mark says he's angry and confused with the way American Express handled his claim.

"I called the company about a week after the fire," he says, adding the cheques burned when flames licked under the top of the opened metal box where he stored them.

ConsumerAffairs.com obtained a copy of the Coffeyville Fire Department's report, which ruled the blaze accidental. "We stayed in a motel for three or four days and then I was going back and forth to make the house livable."

No Refund

Mark says he sent American Express all the documents it requested, including proof that he bought the cheques, the serial numbers of the ones that burned, a copy of the fire department's report, and a claim form.

But he didn't receive a refund within 24 hours -- as the company promises.

In fact, he didn't hear from American Express for several weeks.

"About a month went by and I heard nothing from them," Mark says, adding he purchased the cheques in March, 2006, when he closed his bank account. He says he didn't want to carry around that much cash or deposit the funds in another bank.

"Then I finally spoke to a lady who said, 'We're going to talk about refunding $500.'"

Mark says he tried to explain to the American Express representative that he lost $9,500 -- not $500. But his comments, he says, fell on deaf ears.

"I couldn't reason with her. And then by her mannerism she indicated that the company would not approve my claim at all ... that's what I started to fear."

Claim Denied

In September -- three months after the fire -- Mark received a letter from American Express stating the company "extensively reviewed your claim ... and based upon our investigation of the information furnished by you, there is insufficient substantiation that your Cheques were lost/stolen from you. Under these circumstances, we regret that we must deny your claim."

Shocked and upset by the company's response, Mark contacted the Better Business Bureau (BBB) for assistance. "But that didn't do any good."

American Express, he says, just sent him two more letters in response to his BBB complaint.

The final letter arrived in December -- approximately six months after the fire -- and stated: "We show that our Claims Review department sent you a letter on September 28, 2006, regarding your claim ... at this time, we consider this matter closed."

Mark says he's outraged by the company's response -- and failure to honor its guarantee.

"This has been very stressful for me and my family. I've had a heck of a time finding a job. I'm so broke I can't even afford a postage stamp," he said.

In late December, 2006, Mark contacted ConsumerAffairs.com.

"I am in a dire financial situation and I need that money," he told us. We immediately contacted American Express.

Companies Denies the Denial

Rob Sherman, director of Public Affairs and Communications for American Express Travelers Cheques and Prepaid Services, told us he couldn't discuss the specifics of Mark's case.

He did say, however, that American Express had not -- as the earlier letters stated -- denied Mark's claim. He said the company was still investigating.

Within days after our call, American Express agreed to give Mark a $6,950 refund.

Mark says his family couldn't have received better news.

"I'm failing to convey in words my gratitude to you all," he says. "You made the difference. There were times where we didn't have enough money for gas so I could go out and search for work.

"This money is going to allow me and my family to go on about our lives instead of waiting. I'm happy this is all over and I thank you so very much."

Why did American Express change its decision after we contacted the company?

And how did it reach that $6,950 refund amount?

The company's Rob Sherman again told us he couldn't discuss the specifics of Mark's case. But he added: "We continued to look at the circumstances and made this decision on the refund."

Sherman says his company usually issues refunds within 24 hours after the cheques are reported lost or stolen.

A Rare Case?

"But in rare cases, like this one, we have to look more fully at the claim," he says. "Those are regrettable instances, but we have to make sure we're doing everything according to our policy. I regret this was a frustrating situation for this consumer."

When asked what procedures American Express follows when investigating cases of lost or stolen cheques, Sherman told us: "We ask consumers to notify us as soon as possible once their cheques are missing. We gather information from the consumer, including some circumstances about the loss, and in a vast majority of these claims, a refund is issued usually in 24 hours. But again, it all depends on the circumstances."

American Express, he says, has internal procedures that immediately "flag" stolen or lost Travelers Cheques.

"We record the serial numbers of those cheques in our system and then merchants or banks -- points of transactions -- have authorization systems where they can check those numbers," Sherman explains. "And they would be able to identify that these cheques -- with these serial numbers -- are no longer valid and have been reported as lost or stolen."

Sherman says his company tracks the cheques -- by their serial numbers -- to see where they've been used and who passed them. He refused to say if any of the cheques Mark reported as lost were ever used.

Consumers, he says, can avoid delays or problems if their Travelers Cheques are lost or stolen if they:

• Become familiar with the terms and conditions of the cheques' use. That information is available on the company's Web site, www.americanexpress.com;

• Sign the top of the cheques when they purchase them;

• Keep the serial numbers of the cheques in a separate location -- not with the cheques;

• Keep track of how many cheques they've spent and where they've used them;

• Immediately file a report if the cheques are lost or stolen

"It's in everyone's best interest if we can issue a refund in 24 hours," Sherman says, adding Travelers Cheques never expire. "We regret when we can't do that and those cases are rare."

Little Comfort

His words, however, give Mark little comfort. He says he's lost faith in American Express and its promises.

"I bought my Travelers Cheques under the pretense that if they were lost or stolen, I'd get a refund relatively soon," Mark says. "But the service I received from the company was very bad.

"I'll never buy Travelers Cheques again."

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