Costco customers erroneously receive Citi account closure notices

Dive Brief:

Citi, the issuer of the Costco Visa card for store members, mistakenly sent many card holders emails late last week saying their credit card accounts had been closed. In some cases, the emails were addressed to other people and contained the last four digits of other users' account numbers.
Citi blamed a system error and told Business Insider that user accounts were not compromised. The company stated that the emails were intended to be sent to Costco shoppers whose memberships had lapsed, to alert them they could no longer use their cards.
Costco in June officially moved to Visa and Citi to support 11 million member credit cards that had been provided by American Express via a partnership that began 17 years ago, but customer complaints have mounted since the switch.

Dive Insight:

Costco is set to save between $110 million and $220 million in transaction fees by switching from American Express to Visa, according to analysts. But after this latest snafus, it's unclear whether some of those savings will be mitigated by customers cancelling or declining to use the new cards issued by Citi.

When the switchover was made, it seemed foolish that AmEx was kissing good-bye a partnership that accounted for 10% of its total card users. But AmEx has been slipping in the card market for a while.

The new partnership, announced over a year ago, got off to a rocky start. At the time the old cards became useless, some customers still hadn't received their new cards in the mail. Other customers complained of problems activating their new cards. Now, barely two months into the new partnership, customers are raising concerns over whether their information was hacked, according to Business Insider.

Could Costco have done anything differently in making this transition? In cutting ties with AmEx, it assured it was the best option for its customers, but the new relationship hasn't proven customer-centric so far. The problems that have arisen may reflect more poorly on Citi specifically, but there are three companies involved in this arrangement. None of them get a free pass from customers who won't feel like parsing out which is at fault.