Sept. 18 — Over the past year and a half, John C. Pollock has been cited in numerous newspaper and magazine articles as an authority on credit cards and interest rates. As editor and publisher of the monthly newsletter Bank Credit Card Observer, Mr. Pollock has been critical of the high rates that banks charge their credit card borrowers and has played a part in mobilizing public opinion against those rates.
Most of the paying subscribers — almost 400 — are bankers who pay $290 a year to follow credit card pricing trends as reported by Mr. Pollock and a small staff of writers. Free copies of the newsletter are also sent to members of Congress, newspaper reporters, and other opinion leaders who can learn exactly how high rates are through Mr. Pollock's regional lists of banks.
Unknown to Bank Credit Card Observer readers, and even to its employees, Mr. Pollock's venture has been receiving substantial financial support since its April 1986 startup from American Express Co. The company competes in the credit card business and its public image may have been enhanced by the newsletter's reporting on the field.
This operating subsidy is likely to approach $500,000 over a two-year period, roughly five times the newsletter's annual subscription revenue. This came to light as a result of an investigation by American Banker. Mr. Pollock and American Express officials confirmed the facts to this newspaper within the past few days.
Bank card industry leaders who read the newsletter and experts in business journalism, when asked to comment about the relationship, expressed surprise about it and raised questions about its propriety.
These questions concern the newsletter's journalistic independence from its corporate benefactor, how far a corporation should go in support of a publication in its field of interest, and whether that relationship should have been disclosed before now.
Mr. Pollock and American Express representatives asserted, in separate interviews, that they see nothing improper about the subsidy. They said that it is part of a well-intentioned consumer education program not related to specific business strategies of American Express, and that the newsletter is free from corporate interference.
"One always has to be sensitive to conflict of interest," Mr. Pollock said in an interview. "The name is Bank Credit Card Observer. We monitor bank credit cards. We don't monitor travel and entertainment cards or, for that matter, retail store cards."
Newsletter Covered Optima Card
But the newsletter has covered the American Express Optima Card, which competes against bank credit cards.
New York-based American Express began selling Optima in May 1987, a year after the start of Bank Credit Card Observer. Optima's 13.5% interest rate looks especially attractive alongside the average bank's 17%-18% MasterCard and Visa rates tracked and publicized by Mr. Pollock.
Mr. Pollock, a market researcher by trade with academic credentials in journalism, editorialized in his newsletter that Optima had a favorable impact on the market, and he rebuked bankers for keeping their card rates high.
Questions pertaining to news publications' independence from financial backers arise daily in journalism and particularly in financial journalism.
Howard Simons and Joseph A. Califano Jr., in their 1979 book "The Media and Business," said a business publication must assert its independence from corporate sources so that it does not become "a public relations operation or a business blotter or… a mouthpiece for official statements and pronouncements."
Mr. Pollock's funding came out of American Express Co.'s public affairs budget, American Banker has learned. Mr. Pollock and American Express said there was no ulterior motive in the funding and no meddling by the corporation in the contents of the newsletter. Both said they simply wanted to tell the public where it could find better deals in bank cards.
