Citi Sends Costco Members False Cancellation Message

One has to wonder if Walmart is administering the new Visa card, Citi (NYSE: C) is issuing to Costco (NASDAQ: COST) members.

An undetermined number of members received emails from Citi stating that their Costco Anywhere credit cards had been cancelled on August 19, Business Insider reported. The emails were apparently real, and intended former Costco members. Unfortunately they were sent to at least a few active members.

To make matters worse a number of the emails contained the wrong account number, Business Insider reported. Citi claimed that the emails were a mistake and accounts were not affected but this still looks very bad.

Disturbingly at least some customers thought it was a sign that Citi had been hacked. Business Insider posted some very nice Tweets from Costco members including:

• “Why can’t @Citi get their Costco act together? 5 phone calls and 2 months to get my membership # corrected!! Then they cancelled my card!”

• “got email from @Costco @Citi stating account cancelled with someone else’s name attached to my account. Anyone else?”

• “YES. 37mn hold time to be told to it’s all a “glitch.” Really @Citi? That’s one helluva “glitch.” #iwantmyamexback”

It took around 30 minutes for members to get through to customer service to learn it was all an error.

Strangely enough Citi claims the Costco Visa is a success. It reported issuing 337,000 of the cards and processing $5.7 billion in transactions on them.

This is only the latest Citi Visa blunder at Costco. When the cards rolled out in June, both Costco and Citi were flooded with complaints about them. The anywhere Visa replaced the American Express (NYSE: AXP) cards that Costco customers had been using for years.

An Opportunity for Walmart

This is certainly an opportunity for Walmart Stores Inc. (NYSE: WMT), which owns Costco’s biggest competitor Sam’s Club. Sam’s Club now takes American Express in an attempt to lure Costco members.

Walmart also bought Jet.com; an online shopping club that sells many of the same products as Costco, earlier this month. In addition that Walmart.com has launched Shipping Pass – a membership option that provides a year of two day shipping for $49.99.

Walmart is certainly in a great position to take a lot of Costco’s business right now. If Costco doesn’t address this Citi mess and soon; it could start losing business at a time when its biggest competitor is making an aggressive push for its customers.