On his way home from work recently, Rick Niles of Laurel stopped at a gas station to fill up and as usual pulled out his Shell credit card to pay. But this time, the card didn't work.
"I thought it was a probably just a problem with the gas station," said Niles, 40, an aerospace engineer with Mitre Corp. in Northern Virginia.
Days later he learned the truth. Citi, the card's issuer, had canceled his two-year-old account without advance notice, even though Niles says he pays the $200 or $300 balance each month and has a high credit rating.
Such cancellations, being felt by consumers in Maryland and across the country, highlight a little-known gap in federal laws governing credit cards. Though Congress has toughened disclosure rules for credit card companies - by requiring 45 days' notice for making significant changes in interest rates or other terms - canceling cards without warning is still allowed.
"Apparently, the closure of a card is not considered a material change in the terms," said John Ulzheimer, president of consumer education at Credit.com. "I can't believe I'm telling you this with a straight face." Canceling cards and cutting credit limits without notice has been a practice of long standing. Card issuers say that if they warned consumers about a looming cancellation, customers would run up their balances before they lost credit and card issuers would be on the hook for even more money.
"You are required to get notice [at some point], but oddly enough you are not required to get notice before they cancel the card," said Ruth Susswein, a deputy director with Consumer Action. Issuers must give notice within 30 days of cancellation, she said.
As credit card reform slowly worked its way through Congress, cancellation notices were not raised as a big issue because card companies weren't closing many accounts at the time, Susswein said. "There are more accounts being closed now," and the consumer group is hearing more complaints about abrupt closures, she said.
Citi won't provide details about the cancellation of Shell cards but said it decided to close a limited number of oil partner co-branded MasterCard accounts.
"Citi continuously evaluates how to best meet the needs of its retailer partners and, in consultation with our partners, we periodically make adjustments to the products we offer consumers," the company said in a statement.
Other card issuers cancel cards on a case-by-case basis - if cards are not used for many months, for example - but Citi's recent action is unusual because it closed a large number of accounts all at once, Ulzheimer said.
Many Citi customers can't understand why they were dropped.
Kelly Gatton, 34, of St. Mary's County had a regular Shell card for many years. But last summer, just before a road trip to Florida, she accepted a promotional offer to upgrade to a rewards card. It promised cash back on Shell gas purchases plus a $30 credit on her statement if she bought a certain amount of gas within three months.
On a stormy day last month, she inserted her Shell card into the gas pump, which rejected it three times before telling her to call the card issuer. Gatton, who uses a wheelchair, got back into her van to retrieve another card from her purse, and later called Citibank to check on the problem.
A Citi representative told her that the decision to close her account was based on an Equifax credit report. Gatton checked the report online and said nothing had changed since she got the card. Besides, she said, a Bank of America salesman called her the week before to offer her a card with a $25,000 credit limit.
"He told me, 'You have wonderful credit,' " she said.
Gatton, who handled the bills for the St. Mary's County Sheriff's Office before retiring on disability, said each month she paid off the Shell bill, which ranged from $196 to $411. She does the same with her other credit card bills.
Gatton argued her case to a Citi supervisor, who responded that Citi can cancel a card at any time and that a notice would be mailed out the next day. Gatton's card was canceled before receipt of the $30 credit, but after she complained, the supervisor gave it to her.
Niles also was told that his card had been closed because of his credit report. He said his report showed no changes and that his credit score was a desirable 756 out of 850. And Citi recently upgraded another of his cards from platinum to diamond status.
Gatton and Niles suspect that their accounts were canceled because Citi wasn't making much money off of them.
Niles has other cards, but noted that "a lot of people rely on cards for emergencies, and not to have it would be bad."
And a canceled card could hurt that all-important credit score for customers who carry balances. That's because their amount of debt in relation to available credit suddenly jumps.
Credit.com's Ulzheimer said issuers cancel cards for reasons that might not be obvious to customers.
"Consumers are not risk managers," he said. "What they look for in a credit report is not the same thing a risk manager is looking for."
Accounts might be canceled if cardholders' credit scores drop, they take on more debt, open new lines of credit or live in an area where home values plunged or where unemployment skyrocketed, Ulzheimer said. Or, it could be that the accounts aren't profitable enough or for other reasons that the card company won't reveal.
Gatton had opened another card account recently, and the inquiry into her report by that creditor might have triggered her cancellation by Citi, Ulzheimer said.
Angry consumers still have thousands of credit unions and small community banks where they can get cards when big players play tough, advocates say. But they can also complain to the card issuer that dropped them.
"Sometimes a company will choose to make a change for a whole group of customers and when they look at the specifics, you might be somebody they put into a pot that is considered more profitable when they look at your actual card," said Consumer Action's Susswein.
Being a squeaky wheel can work.
After Brian Watkins' Shell card was canceled, the Illinois retiree aired his gripe on The Baltimore Sun's consumer blog and suggested that irate customers complain to legislators about Citi's practices. Watkins, 71, also sent an e-mail to Shell's president to see if he could get Citi to reconsider. A few days later, a Citi representative phoned to tell Watkins that his account had been reviewed and would be reopened with rebates reinstated.
He doesn't know why it happened.
"Some sort of magic," Watkins said.
Card issuers do not have to warn you that they are closing your account. What can you do?
* Contact the company. It might review your account and decide to keep you.
* Check your credit report regularly from the three major credit bureaus to make sure no incorrect information is posted that would cause a card issuer to drop you.
* Shop for a new card from one of the thousands of credit unions and small community banks.
* Carry cash or more than one credit card, in case your card is suddenly denied.