Why is a FR so bad?

[navigatethis12]

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@cashnocredit wrote:

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Most FRs are IRS transcript requests so I don't see what they would gain doing one every month or even every 6 months. Seems like an indirect way of saying they don't want you as a customer.

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I thought the same thing. They did mention that they can ask for bank statements or current paystubs instead of transcripts. I got the feeling they did not want me when they decreased a 10000 limit to 1000 after just a few months of not being used. I really am not concerned about the accounts, so if they do not want me as a customer, I will not put up a fight.

[scenery_guy]

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@bluesnowman wrote:

Look, just be honest on your apps, and it should not be a problem.

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No disrespect to anyone posting or reading this thread - this is my exact thought as well. App honestly and a FR is nothing more than allowing the creditor to access your records to verify that you indeed did app honestly. After all you are the one asking to borrow HUGE amounts of money unsecured. I know that some people don't borrow HUGE amounts but some do. Suck it up or close the accounts and seek the loans elsewhere if you are offended. 

If I ever got FR'd it might get messy (as a sole proprietor with huge swings in sales yearly) but at the time of each app I stated income (based on projected sales as a SP) as best as I could and in looking back I was pretty close. How they interpret it is out of my control. If they trhottle me so be it. 

[Anonymous]

I've never really commented on anything on the forums after lurking for such a long time because I always see that sooner or later someone always gets it right.  This time, however, everybody seems to be missing the picture.

Yes, there is the mistrust factor which, for some, is important, and there is the fact that a FR can be a major inconvenience, but more importantly is that most here have a rather naive view on just what information AmEx receives and then what happens with that information once AmEx has acted on it. 

Does AmEx shred the IRS transcript after the FR is completed and purge the data from their systems?  No, they do not.  What has been seen is not ultimately unseen.  So what exactly is it that they see on your IRS tax transcript?

1.  Names and SSN of everybody in your household.  Are you married?  Same-sex marriage?

2.  Do you pay / receive alimony.  Divorced?  How many times?

3.  Major medical expenses.  Anybody in your house suffering from a major illness?  Do you have medical insurance?

4.  Legal expenses.  Getting divorced?  Involved in a lawsuit?  Arrested?

5.  1099s.  How much you have in the bank?  Your retirement assets?

The list is endless. 

As an intelligence analyst by trade, given an IRS tax transcript I can paint from your deductions, expenses and income much more than you'd want even your own parents to know about your life, lifestyle and personal circumstances.  And those of your spouse and, often, dependents.  The amount and depth of information a tax transcript shows is amazing for some people.  I, personally, do not feel AmEx needs much less should have access to that data.

If AmEx wanted to, they could obtain a simple copy of your W-2s from the IRS, but they do not and instead opt for a much more intrusive document -- the full transcript.  Is there a reason they do it this way?  If you don't believe there is then I have this slightly used bridge I'd like to sell you.  

The same naive posters here saying "they have a right" and "just suck it up" would be having a cow if the FBI were to get a hold of their tax transcripts without a valid warrant.  Imagine that -- the FBI needs a valid -- and not so easily obtained -- search warrant to get your IRS tax transcripts and you want to roll over and play dead when a commercial enterprise with minimal privacy controls asks for them just so you can continue using their totally replaceable product with probably a low limit to begin with. 

[bluesnowman]

See the thing is, I have decent limits for my income (I'm a student, but I do data entry and wait tables for now, I list my projected income. If they approve, I'm happy, If not I accept it either way). I'll send them bank statements and pay stubs, but I'd rather them not have a look at my tax transcripts. Like Mcarthur said, they know almost everything about (it makes me kinda uncomfortable tbh) your finances, so I do what I can and stay under the radar, because if I get FR'ed, I don't mind them looking at bank statements and paystubs, that's fine, but not my IRS transcripts, a little bit too personal for a financial instituion to know everything I have done financially. Also If they FR'ed me, I'd probably close my account with them. My believe is that, as long as I PIF every month and on time, why should they care where my income is coming from? they should just take my money and be okay with it, rather then shutting down all the spending I would have done on their cards otherwise, but then again, I don't run AMEX either.

[Anonymous]

An AmEx FR would be extremely inconvenient and also demonstrate a lack of trust from them. I would be hesitant to hand over tax transcripts to a potential employer, much less a stranger with a credit card company.

I don't put all my eggs in one basket, and I would gladly cancel my BCP if I ever received an FR. They make up less than 5% of my total limits, and while they don't need me, I don't exactly need them either.

[HiLine]

Wow. I had no idea the IRS transcript contained that much of my personal information, since I've never got to see one. But it's crazy to imagine revealing that much about yourself to anyone. Thanks for providing your insight, McArthur. Your post made me seriously question the way Amex does business. I'm surprised no one has questioned the legal basis for Amex's financial review, but I will definitely be more cautious with my future dealings with this company.

[Anonymous]

HiLine, you are not alone.  Most The vast majority of people do not realize how you can reverse engineer the data on your income tax returns.  Let me give you one simple example:

You have a 1099 showing interest income in the amount of $100.  That tells me your total savings (probably CD's since savings accounts pay almost zilch in interest) doesn't exceed $10k.  Now take that and compare it with what you would expect someone who has been holding down, say, a $100k per year job for several years now and what does that tell you?  

The good news, sort of, is that I doubt AmEx would be stupid enough to take the fact that -- hypothetical situation here -- your spouse is a male or all your children are adopted against you in their credit decision, but then why exactly do they need that information to begin with?  What WILL they do with it?  When they can accomplish their stated goals asking only for IRS verification of your W-2s, for what reason do they have to insist on using THE most intrusive method ever?  Remember, this is all coming from the same company that has a proven record of taking adverse action against cardmembers based on where they shop.

I have seen where people use the colonoscopy analogy.  Colonoscopies are great things, but not when they reach up far enough to tickle your tonsils. 

[bs6054]

See post 749 here http://www.flyertalk.com/forum/american-express-membership-rewards/1085474-financial-review-discussi... for an example of what

shows up on one 4506T request. 

(Mia, the credit card moderator of Flyertalk, suggests the everyone should get a copy to be familiar with what theirs shows).

So this doesn't have all that much detail, but Amex can and has asked for a 4506, which does provide the whole tax return.

[Anonymous]

Actually, what AmEx receives is far more.  They get a line-by-line breakdown of your entire tax return. 

I will try to attach an example that shows page one of several pages:

I have used the exact same form that AmEx uses and checked the same exact options and received my transcript.  It shows nearly everything but for the actual return, schedules and supporting W-2s, and I have seen where AmEx often will check box 6(c) and get those, too. 

[bs6054]

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@Anonymous wrote:

Actually, what AmEx receives is far more.  They get a line-by-line breakdown of your entire tax return. 

I will try to attach an example that shows page one of several pages:

I have used the exact same form that AmEx uses and checked the same exact options and received my transcript.  It shows nearly everything but for the actual return, schedules and supporting W-2s, and I have seen where AmEx often will check box 6(c) and get those, too. 

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OK, so as you said, certainly enough to almost reverse engineer the return.   Now I feel uncomfortable given that to mortgage companies (who end up with a secured loan anyway!).  I wouldn't trust some that I have dealt with to keep my information very secure....