Print edition: 
On his way home from work recently, Rick Niles of Laurel, Md., stopped at a gas station to fill up and as usual pulled out his Shell credit card to pay. But this time, the card didn't work.
"I thought it was probably just a problem with the gas station," said Niles, 40, an aerospace engineer with Mitre Corp. in Northern Virginia.
Days later he learned the truth. Citi, the card's issuer, had canceled his two-year-old account without notice, even though Niles says he pays the $200 or $300 balance each month and has a high credit rating.
Such cancellations, affecting consumers across the United States, highlight a little-known gap in federal laws governing credit cards. Although Congress has toughened disclosure rules for credit card companies — by requiring 45 days' notice for making significant changes in interest rates or other terms — canceling cards without warning is still allowed.
"Apparently, the closure of a card is not considered a material change in the terms," said John Ulzheimer, president of consumer education at Credit.com. "I can't believe I'm telling you this with a straight face."
Canceling cards and cutting credit limits without notice is a long-standing practice. Card issuers say that if they warned consumers about a looming cancellation, customers would run up their balances before they lost credit — and card issuers would be on the hook for more money.
"You are required to get notice (at some point), but oddly enough you are not required to get notice before they cancel the card," said Ruth Susswein, a deputy director with Consumer Action. Issuers must give notice within 30 days of cancellation, she said.
As credit card reform slowly worked its way through Congress, cancellation notices were not raised as a big issue because card companies weren't closing many accounts at the time, Susswein said. "There are more accounts being closed now," and the consumer group is hearing more complaints about abrupt closures, she said.
Citi won't provide details about the cancellation of Shell cards but said it decided to close a limited number of oil partner co-branded MasterCard accounts.
"Citi continuously evaluates how to best meet the needs of its retailer partners and, in consultation with our partners, we periodically make adjustments to the products we offer consumers," the company said in a statement.
Other card issuers cancel cards on a case-by-case basis — if cards are not used for many months, for example — but Citi's recent action is unusual because it closed a large number of accounts all at once, Ulzheimer said.
Ulzheimer said issuers cancel cards for reasons that might not be obvious to customers.
"Consumers are not risk managers," he said. "What they look for in a credit report is not the same thing a risk manager is looking for."
Accounts might be canceled if cardholders' credit scores drop, they take on more debt, open new lines of credit or live in an area where home values plunged or where unemployment skyrocketed, Ulzheimer said. Or, it could be that the accounts aren't profitable enough or for other reasons that the card company won't reveal.
Angry consumers still have thousands of credit unions and small community banks where they can get cards when big players play tough, advocates say. But they can also complain to the card issuer that dropped them.
"Sometimes a company will choose to make a change for a whole group of customers, and when they look at the specifics, you might be somebody they put into a pot that is considered more profitable when they look at your actual card," said Consumer Action's Susswein.
