In a move that sent AmEx stock prices spiraling, Costco Wholesale Corp. and American Express Co. reported that the 16-year partnership between the two companies would soon end. The announcement that took many members by surprise also marks the end for TrueEarnings, AmEx’s Costco-centric loyalty program, which has been a positive factor in encouraging customer engagement for years.
The TrueEarnings loyalty program has historically offered shoppers significant benefits. In addition to waving all annual fees for Costco members, it rewards customers with cash back for every purchase, including 2% returns for dining and travel expenses, and 3% returns for fuel. It also allows members to take advantage of special discounted pre-sale tickets to various entertainment venues and access to member exclusive events.
After the Costco-American Express relationship comes to an end, the TrueEarnings rewards card will become inactive and unavailable for use at Costco or in any other store. This comes as an additional blow to AmEx as the loyalty program has become extremely popular.
According to the American Express website, TrueEarnings has garnered almost 47, 000 reviews and has received, on average, a four and a half star rating for both customer service and card benefits. The inability to continue leveraging this successful loyalty program may make it more difficult for AmEx to attract and retain members, especially among those that were chiefly loyal to Costco.
Current members wishing to take advantage of the TrueEarnings rewards and benefits still have some time, however, as the current agreements between American Express and Costco as set to expire on March 31, 2016. After that the future remains uncertain as other credit card companies will likely seek to take AmEx’s place.
The split between Costco and American Express came after the two parties could not reach an acceptable renewal agreement.
“We are proud of the value created over many years for Costco, for our Card Members and for our shareholders,” Kenneth I. Chenault, Chairman and Chief Executive Officer of American Express, said in a release. “However, we were unable to reach terms that would have made economic sense for our company and shareholders.”