AmEx-KnowledgeBase Deal Off Because of Poor Profits

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While the American Express Co. came under fire for striking a deal with KnowledgeBase Marketing that could potentially undermine the privacy of cardholder information, profitability concerns drove the credit-card issuer to cancel the marketing partnership just two months after its announcement.

AmEx, New York, had proposed to offer the database marketing services of KnowledgeBase, Chapel Hill, NC, to merchants that accept AmEx cards. AmEx would receive a commission from each merchant it signed up for the program. Cardholder information would not have been shared with KnowledgeBase, as reported by USA Today in May.

AmEx spokeswoman Gail Wasserman said the deal was killed because merchants preferred to bypass a referral fee and deal directly with KnowledgeBase. A large number of merchants had expressed interest, which according to a release from KnowledgeBase CEO Tim Toben "represents a very significant business opportunity."

"Although we are disappointed that American Express will be not be working alongside KnowledgeBase Marketing at this time, we are pleased to serve their merchants directly,'' Toben said in the release. "It is our policy to handle all information about consumers in a way that respects and protects individual privacy.''

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