The Fine Print: The Successful Fight Against A Citi Shutdown

The following is not legal advice. Please contact an attorney or Alexander Bachuwa if you have questions or claims regarding consumer arbitration. 

Following one of my Fine Print posts, a Frequent Miler reader messaged me regarding a problem she was having with her Citi accounts. Despite being a Citi customer for years, unexpectedly all of her credit card accounts were instantly shutdown without explanation and millions of ThankYou points were confiscated. What follows is the battle we had against Citi and the final result.

While the details of every case involving account shutdowns are unique, the fact pattern is generally the same.

The Inducement

  • A customer signs up for an award credit card which has a bonus after spending a specified amount.
  • The customer is granted the sign-up bonus.
  • The credit card may have additional perks such as receiving 5X points for purchases at grocery stores or gas stations.
  • The customer takes advantage of this offer.
  • The customer is awarded points for doing so.
  • The annual fee on the card becomes due.
  • The customer calls to cancel the card.
  • The customer is given a retention offer for his or her loyalty whereby the 5X spend promotion is extended.
  • The customer takes advantage of this offer.
  • The customer is awarded points for doing so.
  • The customer periodically redeems points for mortgage payments, flights, and hotels while maintaining a healthy points balance.

The Forfeiture

  • Months, perhaps years later, the customer receives a notice that all of his or her credit card accounts have been shutdown and his or her points have been forfeited.

Futile Attempts at Resolution

  • The customer calls customer service who confirms that the account is indeed closed and refers the customer to a letter that states the same.
  • The customer writes a letter to the corporate office where an ‘investigation’ of what happened takes place.
  • The customer receives the same letter on a different letterhead.
  • The customer files a claim with the feckless Consumer Financial Protection Board.
  • The customer receives the letter again.
  • The customer is left with three options:
    • Give up
    • Small claims
    • Consumer Arbitration

Small Claims vs. Arbitration

The overwhelming majority of contracts governing consumer products and services have a dispute resolution provision that limits a claimant’s remedy to two options: file in small claims court or prosecute the claim through arbitration. A class-action lawsuit is strictly prohibited. The issue with the small claims option is that damages are limited and that some states actually prohibit attorneys in such proceedings. The latter point clearly favors big corporations that have infinite resources and a stable of lawyers.

In this case, my client agreed to pursue the claim in arbitration and hired me to represent her on a contingency fee basis i.e., I would only collect a fee if the client prevailed or if the case settled. Absent this fee arrangement, it would have been cost prohibitive for my client to retain a lawyer to go up against a behemoth like Citi.

Intent to Arbitrate

I filed a claim against Citi with the American Arbitration Association (AAA) seeking two forms of relief: Monetary relief in the amount of $17,000 and non-monetary relief which would be the restoration of my client’s ThankYou points. The monetary claim was based on $.008/point, half of the value of ThankYou points when used by a Citi Prestige cardholder to book American Airlines flights. I did not seek the entire value of the points because my client was more interested in getting her points back than money. The client would appear greedy if she asked for the full monetary value of the points and the actual points. I advised my client that it was a long-shot that Citi would ever give back her points even if she won in arbitration. At the same time, if a points refund was not an option, we could ask the arbitrator for the full value of the points in terms of the monetary award.

First Correspondence with Opposing Counsel

After I filed the claim, I waited for a case manager from the AAA to be assigned to the case. The case manager is in charge of scheduling hearings and serves as a liaison among the attorneys and the arbitrator. That process took more than thirty days to complete. Shortly thereafter, I received an email from Citi’s lawyer. I spoke to the attorney and was informed that my clients’ accounts were closed for consumer abuse in connection with manufactured spending. Citi presented my client with an offer to settle the claim for $3,500 if we agreed to dismiss the arbitration claim.

A Note on Arbitration Costs

Under the consumer arbitration rules, the consumer’s side has to pay $200 to file a claim. The respondent has to pay its portion of the administrative fee which is $1,700 as well as compensation for the arbitrator which starts at $1,500. In addition, the respondent would have to pay outside counsel to represent the company in the matter should it choose not to use its own lawyers. In addition to the outside counsel’s hourly rate or fixed fee, the respondent may also have to pay for air, hotel accommodations, and a per diem if the attorney does not reside in the location where the arbitration is held. As a result of such costs, some companies find it financially prudent to settle claims while others will incur the cost in order to send a message to attorneys and consumers that simply filing an arbitration claim will not result in a cash windfall for the claimant.

The Rejection

This claim had merit. It was not, by any means, frivolous. As a result, we rejected the proposed settlement and began preparing our case.

The Terms and Conditions: Fraud vs. Abuse

Citi’s terms and conditions have evolved over the years, undoubtedly as more customers discover more ways to maximize their points earning potential.

Here are Citi’s terms for ThankYou accounts from October 2016:

Fraud, Misuse, Abuse, or Suspicious Activity. If we see evidence of fraud, misuse, abuse, or suspicious activity, we’ll investigate and, if we determine that fraud, misuse or abuse has occurred, we may take actions against you. These actions may include, without limitation:

  • Taking away the Points you earned because of fraud, misuse or abuse
  • Stopping you from earning Points
  • Suspending or closing your ThankYou Account
  • Taking legal action to recover Rewards redeemed because of such activity and to recover our monetary losses, including litigation costs and damages

Here are Citi’s terms from November 2013 (when my client was using her Citi cards):

ThankYou Rewards may close or freeze your ThankYou Member Account immediately. If you have conducted any fraudulent activity, ThankYou Rewards reserves the right to take any necessary legal action and may have grounds to confiscate any rewards redeemed as a result of such activity.

The language in 2013, the period my client was earning the majority of her points, cites fraud not abuse as a reason for account shutdown. The definition of fraud varies by jurisdiction but, for the sake of simplicity, the dictionary definition is wrongful or criminal deception intended to result in financial or personal gain. In my legal opinion, alleging fraud means alleging criminal activity. Manufactured spending may be frowned upon but it is not against the law. My client admitted that she was buying a significant amount of gift cards to take advantage of the category spends but in no way was she deceiving anyone by doing so.

A Note on Counter-Claims

I advise my clients of the possibility that a counter-claim may be filed against them. For many corporations, a counter-claim is an automatic response, a passive aggressive way to signal to the claimant that the corporation is actually the one in control. Some corporations like eBay include clauses in its arbitration agreement that if a claim is found to be frivolous, the consumer will be responsible for the aforementioned arbitration costs. Some corporations use counter-claims as a tool to induce settlement or surrender. Given the capacity of the opponent, it can be very intimidating for the lawyer and client alike to move forward with a claim when they are suddenly under siege by a foe that is too big to fail.

The Legal Argument

In our estimation, the 2013 terms and conditions governed this claim. Confident that no fraud had been committed, my client was willing to testify that she simply took advantage of the offer that was presented to her and if Citi wanted to place a cap on the offer, it could easily have done so. Furthermore, my client would argue that her past behavior was ratified by Citi when she was given a retention offer which encouraged her to keep spending in the same manner as she had done in the past.

If Citi somehow tried to use the consumer abuse language of 2016, our argument would have remained the same. Citi, equipped with a team of lawyers and a robust marketing department could have used more explicit language to define what is and what is not permissible. If a mom and pop grocery stores has the wherewithal to place a limit of ‘one turkey per household’ during a Thanksgiving Day sale , then surely Citi could have foreseen the consequences of not implementing a cap on its promotion. Not only did Citi fail to mitigate against this possibility, it also encouraged it by blatantly stating that there was not a limit on points that could be earned. Unsurprisingly, throughout this process, Citi would not divulge how much category spending is enough to trigger a shutdown.

Finally, it can be argued that Citi was unjustly enriched. Citi capitalized from the tens of thousands of dollars from my client’s purchases in the form of transaction fees. If Citi truly believed that fraud or abuse had taken place, it should refund the fees to the merchants from where the transactions occurred. It is unseemly that Citi only cried foul when it was time for it to uphold its end of the bargain.

To Settle Or Not To Settle

The problem with having an attorney who is involved in the world of points and a client who is just as obsessed is the lack of perspective. Although I was excited by the prospect of going through the entire arbitration process with Citi, I also had an ethical obligation to inform my client of the risks that she faced. First, there still was the chance of a counter-claim, a remote possibility but one that would weigh heavily on the client if it materialized. Second, the arbitrator, an autonomous decision maker who is not bound by formal laws, could easily decide that my client is greedy and is entitled to nothing. It is not implausible for an arbitrator to rationalize that my client violated the mythical ‘spirit of the rule’ doctrine by exploiting the promotion. While I vehemently disagree with that logic, I recognize that an arbitrator can decide anyway he or she chooses without having to cite reasons for doing so when issuing the award. Finally, if we did prevail, it is very likely that Citi, as is its right, would appeal the award. From there, we would have to start the process anew.

The Counter-Offer

After going back and forth and forth and back, I thought I found a clever way out of this pickle. I called Citi’s attorney and proposed a settlement whereby the client’s ThankYou account would be temporarily restored. Citi would not have to pay more than the original $3,500 settlement amount and would not have to reopen the client’s credit cards. I even said that Citi would only have to put back a percentage of the points. Citi promptly rejected this offer.

The Settlement 

Two weeks before the preliminary conference was set to take place, I countered with a final cash settlement amount that was higher than Citi’s original offer. A few days later, I received an email that Citi had accepted my offer. I found it quite interesting that Citi would rather pay more money than reissue points, something that was valuable to my client but has no inherent monetary value.

Ultimately, my client and I were simultaneously happy and disappointed that this case settled. We were happy because we took on Citi and received a decent settlement amount. We were disappointed because maybe we should have kept on going. Perhaps we could have won. Perhaps our defiance in victory or defeat would have sent a stronger message to Citi.

The Confidentiality Agreement

In most arbitration cases that settle, companies require the client to sign a confidentiality agreement. The companies request that the attorney do so as well. As a matter of principle, I refuse to sign these agreements. Had I done so, the general public would remain in the dark. Claimants would not know that it is possible to go up against corporate giants like Citi. They would have little or no insight regarding the intricacies of the arbitration process.  Most importantly, they would have no idea that real results are possible.

Initially, Citi refused to waive the confidentiality agreement as it pertained to me, something I felt was borderline unethical since the settlement agreement was between the client and Citi. I informed my client of this awkward situation and she told me to remain steadfast in my belief of not signing the confidentiality agreement. In the end, Citi capitulated to my demand so long as I did not disclose the exact amount of the settlement. While I would have liked to boast about how much money we received, it was more important for me to be able to share the details of how my client and I overcame Citi’s questionable behavior. It is my hope that more consumers will come forward and challenge not only Citi but other corporations that have a disproportionate amount of power over its customers.

The Way Forward

Even though a class action is not possible against many corporations, filing numerous, meritorious claims against companies can crack the shield of invincibility as they will be forced to pay more in settlements and awards, more in attorney fees, all the while enduring negative publicity. With each claim that is settled or won, the voice of the consumer will grow louder while the avenues to escape liability will be shutdown, an ironic twist that is long overdue.


About Alex Bachuwa

Alexander Bachuwa is a New York attorney who focuses on consumer protection. He is also a BoardingArea blogger. Contact Alex at through his website at and visit

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  1. Well done Alex. Thanks for letting consumers know they can fight back and win. While I am curious as to the settled amount, all that matters is your client is happy with the outcome. Excellent work.

  2. I’ll make the same comment I did when American Express was shutting down accounts for Blue Cash – it seems so simple to put limits on these 2x or more bonuses of $50k, $100k spend or whatever and then the credit card company would not have these issues, similar to how Chase seems to manage the Ink products. Also the customer would know the limits and complicated terms of what you can buy or not would be unnecessary.

  3. I’m glad that you fought Citi. I wish that the client had agreed to pursue the claim through the entire arbitration process.

    I agree that ethics require you to present an informed offer, but I feel that you should have gone after the full value of the points and not settled for a dime less (unless against client’s express consent). You had a very strong case. Even if the 2016 terms had of governed, the language is ambiguous and fails to provide notice. This is the reason why I always reject arbitration agreements, if possible. I want to be in a court.

    I would love to take on a few of these cases – even if just at cost once I finish law school / pass the bar. Consumer protection is interesting and a feel good cause to help fellow human beings.

    • Personally, I’d rather be in arbitration than in court based on my experience. It’s definitely not the preferred instrument of dispute resolution for many lawyers which is partly due to how we are taught in law school: sue, sue sue! litigate, litigate, litigate.

      Pass the bar and I’ll work a case with you to give you experience.

      I agree that we had a strong case but it’s a lot easier to say that now that it is complete.

  4. “The issue with the small claims option is that … the plaintiff will not be represented by an attorney.”

    This is wrong. Most states, including New York (where Mr. Bachuwa is presumably a licensed attorney), permit counsel representation in small claims court. Only a handful do not allow it, such as California. It’s both surprising and peculiar that Mr. Bachuwa is completely unaware of this.

    • My oversight, I was thinking about this particular case. The claimant resides in California so the practical option in terms of logistics would have been to file it in small claims there. I have made the correction above.

  5. This is exactly why I vote republican. Schmucks should be slaves to corporations to be used and abused. Not win in arbitration.

    Make America great again. Eff Americans!

    The time is fast approaching.

  6. Could you share who represented Citi in this matter. If not the firm name, Was it outside counsel from a small or midsize firm or in-house people.

    From my corporate law experience these cases are so tough to deal with. You don’t want to set a bad precedent but the cost of fighting them is almost always higher then just settling from the get go.

    • It was not in-house. It’s interesting how the settlement negotiations go with in-house and how it changes once they are contracted out. It depends on the company but sometimes a better offer comes from in-house because they have yet to spend money and sometimes a better offer comes when you move forward and outside counsel can then advise the client that it is financially impractical to move forward.

  7. First of all, it is good to see you wrote about this fight against the “too big to fall” bank. Citi is among the worst in upholding its end of bargain when it comes to this type of situation.

    Curiously though, why this has dragged so long since the accounts were closed in Nov 2013 if I did not misread and it took 3 years to settle?

    Understand there were many roadblocks including the worthless CFPB complaints that ate up lots of time, but still it seems taking an extraordinary long time.

    For much smaller claims (between $2 to 5K) thru the Small Claims Courts in different states that the cases were shared among private discussions, they all were settled the latest a week or so before the initial court mediation appearance. Inevitably it was only a paralegal handled all the back and forth via phone / email.

    Citi will send out a 1099 on these settlements. The claimants should make sure the tax portion is included in the settlement amount with a ball park calculation.

      • OK, so the accounts are shut down this year and the bulk of the points were earned from prior years.

        Chase seems now handle this matter much fairer by giving 30 days for customers to redeem all their points as well as refunding all annual fees pro rata. Much better solution for both the customer and the bank.

        • I tried to negotiate that but nope! They were adamant that it was consumer abuse and that the client was entitled to nothing.

  8. So in the end wouldn’t it have been cheaper/more lucrative to go to small claims in California?

    You should link to this story:

    Man’s $100000 Journey Through Arbitration With Citibank

  9. Thanks for posting this (and laying out the legal arbitration process & arguments), Alex. It’s good to know that consumers actually stand a chance when fighting ‘abusive’ behavior by large credit card issuers. Fight the (Citi) power! Citi could have easily stated a cap (as you mentioned) on the manufactured spend, or at least bothered to send a warning letter before arbitrarily closing all her cards and destroying all her points

  10. Alex, i don’t understand why a charge of unfair business practices does not come into play here to A. get past the no class action bs and B. to get punitive treble damages?!?!?!??!??!?!

    Citi (and the others) all compensate bloggers/etc wildly to pump their cards. yes, the bloggers are forced to put disclaimers, but it’s an open secret in the industry that the banks DO look at blog content and DO demand changes. Citi compensates many affiliates who produce considerable MS content. To fire clients and steal their points for doing the same thing the Citi-compensated blogger speaks of is… well… an Unfair Business Practice.

    Further, these Citi-compensated blogs focus on the very real tangible value of these points- ie: 1st class Intl. Travel. Ergo, the true damages are…. THE TRUE DAMAGES. to call that .08 or event 1.6 is not in line with Citi’s own advertising. I have used points for Intl First Class where i took screenshots of the paid cost for the ticket i flew on with points- it was over $28,000. I can establish that this is how I redeem the points. Thus, the damages are FAR beyond the paltry numbers you negotiated from. These are not hypothetical. Redemptions are not revenue based (except Southwest), so to pretend they are is simply inaccurate.

    Comment please…

    *note, my sister’s Citi account was shut down for, as near as i can guess, me being an authorized user (i was shut down for mild MS, MS on her account was minuscule and was only open for 5 months). they stole 60,000 TY Points and i am helping her sue them in small claims court for the TRUE value of the points. The above will be the basis for my argument. I plan to ask for, through discovery, their agreements with bloggers and any correspondence related to content with any bloggers advertising their credit cards. i imagine they will find a legal way around providing them- but i’ll try. Bottom line, they are compensating advertisers/bloggers to explain (and promote) the very conduct that they are then calling fraud/abuse. They are deriving financial gain thru transaction fees that are ‘goosed’ by MS, then confiscating the points. Frankly, a good lawyer should be able to eviscerate them…..

    • “A good lawyer” eh? Not sure what you mean by that but there is a lot of truth and plenty of wishful thinking in your reasoning. Obviously, we all know that 94K TY points can be redeemed for SQ First. That ticket is 12k. So by your estimation if you had millions of points you should get how much?

      What statute do you plan on using for your unfair business practices claim? There’s a cap in small claims so I don’t get how you plan on getting full value.

      One of the points of this post is that lawyers and clients are forced to sign confidentiality agreements and so there is no way that parties can discuss what works and what does not.

      I could help you with your claim if you want but some of your expectations are unrealistic.

      • hi Alex.
        A. ‘good lawyer’- not a diss on you- idk you. i meant a good lawyer with a large enough points case and a client willing to take it all the way (ie: not settle unless made substantially whole).

        B. my sister’s low point amt un/fortunately makes arb a non starter. Small Claims in her state is $10k- high enough for 60k points. the only thing that makes her case unique/interesting is that i am pretty sure they closed her account because they closed mine, as i was an authorized user on her acct. i wonder the legality of that given that such a closure harms her credit and that, by definition, AU’s are not responsible for anything. They could have just closed my AU card and left hers/her points open. Chase does this too based upon address (even when not an AU) and it just seems like a very questionable practice given the negative impact on an ‘innocent’ party.

        C. The idea of arguing the REAL value of the points, as i did above, is to get the points reinstated. If Citi argues my valuation is ridiculous, reinstating the points is the fair solution to BOTH parties. in fact, such a resolution vastly favours Citi based upon their low valuation of the points.

        D. i’m not a lawyer. is it unfair business practices or straight out fraud, idk. my point is that Citi is paying to advertise (THAT is exactly what paying bloggers is. in fact, it’s result based advertising- they only pay if the target opens an acct) both the reward of first class travel, but also the method to achieve the point balance needed to for such redemptions- MS. Again, not a lawyer, but I imagine a smart lawyer can find a statute being violated when you pay to advertise something, the client does exactly as you advertised, you (Citi) are enriched by said action, and then you fire the client, confiscate the points (denying the client the advertised gain) and damage the client’s credit in retribution (several cards coded ‘closed by issuer’ on your credit report are a negative. i have been asked about ‘closed by issuer’ trade lines by issuers to determine my creditworthiness). Citi advertises something to entice consumers to take actions that enrich Citi, then Citi confiscates the advertised rewards and damages the consumer. Legal?!?

        I’d argue it’s akin to advertising a BOGO sale, The customer buys one and then the customer has the 2nd one taken away, is banned from the store for life, and the store contacts all other stores in the area, warning them that, without going into detail, they have banned the customer!

        hence my ‘good lawyer’ comment. a good, driven lawyer could certainly make hay with these facts. the proper discovery requests related to blogger compensation, internal conversations about such, internal conversations about MS, would either prove very interesting or prompt a settlement to avoid disclosure imo.

        E. i think you’re wrong on ‘optics’. the optics of a well argued prosecution will make Citi look far worse than the plaintiff.

        F. Chase initially took Citi’s approach. After some court challenges, which they lost as i hear from FT, Chase decided on their current policy of allowing 30 days to transfer. They didn’t do this out of kindness, they did it, imo, because they wanted to avoid a case such as i have laid out.

        G. unfortunately, i have been in multi million $ litigation before (contract, as plaintiff). i am not naive. it went on for years. i was up against a multi billion $ company- just me. they bury you will costs with their in house counsel, then it goes to outside and it starts anew. an unrivaled time/money suck war of attrition (ie: bury you til you run out of $).

        • A lot to say here:

          A. If it was my account then I could go nuts and argue everything under the sun. As I do more of these, I think I will find that unicorn case. The idea of this post is for people to come forward and for me to hold Citi accountable.

          B. Keep in touch. If you want someone to bounce ideas off of, I wouldn’t mind helping.

          C. I like this point. I think I need to be as ridiculous as they are when I file a claim. The issue becomes how far you want to irk the giant gorilla. He can squish you if you piss him off too much. That’s why cases get settled. Again, it will take the perfect storm of circumstances to say bring it. My fear for my clients is that they will assign in that one auditor who will analyze every transaction back and forth in order to try and prove fraud. Fraud is such a strong word but it is thrown around recklessly by companies to get out of these claims.

          D. Interesting legal theory. I think a creative lawyer can find cases that may not have anything to do with contract law and use that as a framework for a legal argument. I was going to argue property rights but damn Citi includes a clause saying ‘points are not property.’ We are dealing with savvy people here who simultaneously claim ignorance. It’s very interesting.

          Discovery is limited in arbitration but it depends on the arbitrator. It doesn’t hurt to make one legal argument after another, case by case, and hopefully crack one wide open.Then repeat.

          E. I disagree. Arbitrators are lawyers and retired judges. They may either think, oh this guy is clever and took advantage of the weak terms or they will say this guy is a criminal and I’m giving him zero. That’s a risk even with that perfect case. I believe if this post was a case brief that I presented a sound argument for full recovery but I can’t guarantee results.

          F. This is great to hear. Again, most of this is done in secret so posts and feedback like this helps everyone.

          G. They’ll never bury me! I have nothing better to do haa.

          I believe this case and this post was a step in the right direction. It’s only one claim but it is one that is now public. I learned a lot from this case and others I have done that will help me with the next and the next. I’m a one man operation but I will keep going after all of them whether it be a cell phone company who overcharges by $5 or a bank who takes away millions of points.

          Hopefully, the next post will be a victory in arbitration with everything included.

          I appreciate your enthusiasm.

  11. Very interesting read. Thanks for posting.

    I am trying to gauge the cardholder’s possible level of activity. My math comes out that a fee to Citi from merchants of 2 cents per dollar charged would mean $10,000 of fees would result from $500,000 of sales. So if Citi’s fees from this woman’s MSing were “..tens of thousands of dollars…”, we’re talking seven digits of MS purchases here, right?

    • The cards were used for years for more than getting points. There was normal spend on them too. I never broke down the calculations of what was category spend and what was not.

      Also, I didn’t say Citi made tens of thousands in fees. I’m saying they made significant fees.

      Finally, I would argue that if a customer spends 1 billion dollars on grocery stores then Citi should still be on the hook for the category spend because they could easily limit the bonus to 10k a year, 1k a year, whatever they choose! Chase INK does it and nobody can argue otherwise.

      • “Citi capitalized from the tens of thousands of dollars from my client’s purchases in the form of transaction fees.”

        Perhaps I misread what you meant here. I was only trying to see what level of activity tripped the Citi wire in your client’s case.

        You’re correct in noting that I didn’t mention organic spending, which is very high for a small percentage of people.

        I wonder why these banks don’t cap at least bonus spending, even after some cardholders have racked up huge point balances. I agree that since they did not set a limit, there isn’t one.

        Finally, I am intrigued by Abby’s post on using charges like unfair practices to blow-up limitations on claims, venue, etc. I hope she provides the road map you asked for.

        • And I misunderstood what you meant. I thought you were estimating how much Citi would’ve made off all the purchases.

          No one is denying there was MS but there was no restriction against any kind of spend.

          I’d love to hear Abby’s thoughts but one can’t just argue ‘unfair business practices’. It has to be rooted in law. I presented a legal analysis of what we would have done had we proceeded and our decisions for settling.

          Each case is different but I’m not seeing how an arbitrator or judge says you can transfer TY points to an airline or hotel. The value of that flight or hotel should be used to calculate damages. In fact, when I was at BACON conference, I spoke to Gary Leff about how he testifies in court about points. He and other bloggers have a valuation of what points are ‘worth’ and it’s not what they can be converted into. That’s why we did a monetary and non-monetary claim.

          Punitive, treble damages etc are difficult to prove in any case let alone one where the optics may not look great to someone unfamiliar with points. While I would love to hear new legal theories for challenging shutdowns, I can’t just make stuff up and present it to my client as a real possibility.

  12. I had a small claim case in California. It was against a big corporation. We reached a settlement and the corporation is going to me some money. I was asked to fill out a W-9 form, and I did.
    The settlement money is in exchange for a product that I paid for but did not receive, so I had to buy it again from elsewhere, and the amount of settlement is exactly equal to the amount of item I bought plus court filing costs.

    At the time, I had no idea that I may be taxed on the amount of settlement. Will I receive a 1099? And if yes, how should I dispute that, given that I had no monetary gain or income from this settlement I just got the money I had paid twice for one product.

  13. An interesting post, not least because it leaves one wondering how much is being talked about here. Did the terms of the settlement permit you to publicly note how close your client came to being made whole?

    • In these cases, I don’t think we can ever be made whole because as points enthusiasts we understand that our 30k points are worth more than an AA flight but the argument that Abby said above will never be upheld.

      If you have millions of points and you earned them from MS or if you earned them by spending millions, the rule of churn & burn still applies. Besides shutdowns, devaluations and restrictions always come up.

      My client regrets not transferring the points more than she regrets anything else.

    • There is a CAP on recovery in small claims! And you are getting so obsessed with this case when the point of all these posts is to share information for the next case and the next case and the next case. One off cases in small claims is not going to change anything. Read the last line of the post.

      • Next time when I come back with an award for $35,000 maybe then u will understand that the community is making progress fighting back.

        • For NY: The Small Claims Court has monetary jurisdiction up to $5,000.00. Claims for more than $5,000.00 may not be brought in Small Claims Court. They must be started in the Civil Part of the court or in a different court. A claim for damages for more than $5,000.00 cannot be “split” into two or more claims to meet the $5,000.00 limit (that is, bringing one $5,000.00 claim and another $1,500.00 claim to recover damages for $6,500.00).

          Get it now?

        • California: Small claims court handles cases that involve disputes over money or property, usually below a set financial limit. In California, an individual can collect up to $7,500 in small claims court, while corporations and limited liability companies are still limited to $5,000.

          We were asking for 17k + refund on points. Just because we didn’t get it doesn’t mean we should not have demanded it. That would be impossible in small claims.

          Bottom line, in my legal opinion, small claims is not the answer. It’s not ‘big league’ or is it bigly?

  14. Wonderful article. Thank you for sharing!

    In California it is illegal to close a consumer’s credit cards without 30 days notice. Is that law useful here? I’ve pointed it out to US Bank several times and have only been condescendingly told “we assure you that all necessary legal requirements were met as it relates to the closure of your accounts.” I am livid and will go to hell and back to get justice.

    • I looked at that and allege it in addition to other standard violations. This law is weak because it includes this “unless otherwise in violation of any provision of the agreement” Like really lawmakers? Obviously they are always going to use that as an out.

      1747.85. Unless requested by the cardholder, no card issuer shall cancel a credit card without having first given the cardholder 30 days’ written notice of its intention to do so unless the cardholder is or has been within the last 90 days in default of payment or otherwise in violation of any provision of the agreement between the card issuer and the cardholder governing the cardholder’s use of the credit card or unless the card issuer has evidence or reasonable belief that the cardholder is unable or unwilling to repay obligations incurred under the agreement or that an unauthorized use of the card may be made. Nothing provided herein shall be construed to prohibit a card issuer from placing the account of a cardholder on inactive status if the cardholder has not used the card for a period in excess of 18 months or from requiring that cardholder, upon subsequent reuse of a card, to provide to the card issuer such updated information as will enable the card issuer to verify the current creditworthiness of the cardholder.

  15. Alex. You da man. Awesome article.

    Thank you for practicing in this area. I am almost certain your office will have phones ringing off the hook.

    Maybe even look into Bitcoin bank shutdowns as well. Very similar circumstances. That’s a very hot topic currently and Chase is the leader there.

    While we claim banks are greedy and take advantage of their customers, I think we also milk the system. Goes both ways. But I am wondering your opinion on a few things:

    1) Almost all promos and 5x anything has caps and people still get shut downdown for abuse. As you mentioned in the article, banks are 300% aware of everything thats going on so why not reduce the exposure to something much smaller? I never understood that. why offer 5x groceries up to 10k spend in 6 months if thats too ridiculous?

    2) Every case is different but you were using old terms. what about the various updated terms not just from citi but other banks as well? would these new terms, due to their new awareness, kill us? Also I thought banks can update their terms anytime and we are forced to agree or close the CC? Wondering how you were planning to fight with old terms.

    3) I feel like CFPB is being abused so much to the point that its now an ineffective tool with all bark and no teeth or costly damage to banks. They just ignore the CFPB. What do you think?

    4) Articles like these just drive home banks are fully aware of our community. Surprisingly they dont write an algorithm to wipe everyone off the face of the earth… so what now? Whats safe? Essentially i am wondering what your opinion is about maximizing MS opportunities because it sounds like it will STILL be allowed up to a tolerable liability whatever that amount is but MUCH lower than what TC allows. Chase INK is a great example.

    Thank you Alex!

    • Bitcoin eh? The issue is how to get the word out. Blog opportunities like this definitely do.

      1. This is what I’m trying to figure out. What is behind the curtain. What else can it be but an out for them to shutdown a consumer’s account after they’ve already collected the transaction fees. I visualize executives in an office laughing at this very plot. With limited discovery and no class-action, we will never know.

      2. I would argue that old terms govern the behavior that occurred at that time. I would also say that new terms are reactive. Even Citi’s new terms are vague. They don’t make them too specific because that would kill the opportunities in #1 above. What banks do not anticipate is the OCD level of points people who will find every way to get the most out of a promotion. Combine a points person with an OCD lawyer and I’ll find a viable legal argument to keep going after them.

      3. I have zero confidence in them. It’s a government program going up against lobbyists and all that. If they were effective, I would not have so many cases with claimants that said they had no luck with them.

      4. The reality is that there aren’t many people who travel on points, churn cards, MS, and are obsessed with this like we are. People still ask me on my travel blog what credit card they should apply for. “I hear the Alaska card is a good one.” That’s your typical consumer. Even I don’t get into the weeds like FT and forum people do. I get criticized because I didn’t stack the 10th gift card on the 20th promotion. Long story short, we are so insignificant that we do not matter. We might even help because we tell our friends of our travels. Some apply for cards and are responsible and others get into debt for that free flight and are still paying for that coach flight to HNL. And then obviously bloggers have clear financial relationships with banks.

      How much is too much? I don’t know and they won’t say. I used to feel guilty about getting 2k vanilla reloads in a day. Then I heard about people going to every CVS in the neighborhood. To be safe, I think people should only do what they need. This is not a retirement fund. You earn the points, you burn them. Too many things can and will change otherwise.

      • Alex. Really appreciate the responses man. Great material.

        I am surprised your travel blog and professional page dont mention anything about each other. I guess you dont really mix business with pleasure in terms of digital profile and limit the cross-sale. Thats probably a good idea. But I also see that your primary home page for your law firm doesnt make your practice areas very clear. I originally thought you only litigate against phone bills or something to do with basketball. haha. Your skills obviously have wider reach. Consumer arbitration should be made very clear because that seems to be your specialty.

        I say this because after this guest post, I will be sure to refer everyone on Reddit and FT if they are having trouble fighting any of the big banks like Citi. OCD Travel Blogger Consumer Protection Arbitration Attorney is a HUGE asset to this community whenever major issues or roadblocks arise. Hence I mentioned Bitcoin. The BTC community is even bigger with plenty of VC funding and loads of blogs cover it. However, large banks are scared of it since its used by criminals similar to MS techniques.

        Here is a taste:

        Either way, you have a very interesting background. Hope youre enjoying Mongolia if you are still there chillin. Take care man.

  16. Alex you may be aware apparently Citi will forfeit TY points if the TY points sponsor account is closed down – I believe the time frame is 60 days if the TY points are in the original account or 90 if transferred to another account with TY points. I got the 50K checking bonus. Transferred the checking TY points to my Prestige account, then closed the checking account. Around day 60 after the transfer I took a screen shot of the Citi web interface showing my checking TY points would not expire until 2019. However the points were confiscated so there was a contradiction between the T&C and the information provided to the consumer when logged into their TY points account. Perhaps not by accident it appears the feature to see when your points expire is gone from the site. How would you approach this?

    • I would call me at once, 646-580-7509! I am going through this exact situation right now and they are being absurd about it. I sent an office to the letter of the president. I have documentation from a chat conversation where the agent says ‘Congrats you have 100k points that are not expiring.’

      And then they were taken away and Citi didn’t care.

  17. Hi Alex great job! very irritating how businesses write everything in their favor. Actually thinking I need to start a business.

    Anyway. I’m getting up there in How much I get back in cash using 2% cards. I might be getting to point where I show up on radar. Fidelity and Spark. I sweep the money as soon as possible BUT worried somehow do clawback or come after me…???

    any advice thoughts on risk etc? Probably not going to stop me from doing what I do. and I haven’t read cc agreements and won’t til maybe forced to. Or having CC companies read them to me.

  18. I want to addend my earlier comments to underscore that I think Alex is doing top notch work in a largely unexplored area of client representation here.

    • Much appreciated. I am glad to help my clients and the community because I have experienced the short-end of these transactions myself and before I started doing consumer arbitration, the only recourse I had was HUTA. With each case, with each company, and with each client, I learn more and more and will continue to post relevant case studies so long as Greg will have me. Simultaneously, I will be more aggressive (if my client’s allow) in pursuing these claims beyond settlement while testing creative legal theories. I have no ego in this and gladly welcome criticism that will benefit future clients and the community as a whole.

  19. Hi Alex,

    I’d like to talk with you about 2 points/cashback forfeitures I’ve encountered where BB&T and Wells Fargo have both attempted to unjustly enrich themselves at my expense, both occurred in 2015. Wells Fargo after a long dialog has invited me to file arbitration. I will e-mail you with details. Thanks!

  20. Hi Alex,

    Maybe the wrong place, but are you generally allowed to recover non-monetary costs such as time spent? I recently spent a lot of time entering what I viewed as a lucrative sweepstakes and then later found out I was unilaterally disqualified at the company’s discretion. I tried to resolve it with them to explain why they should not have disqualified me, but basically they invoked their right to disqualify and told me to pound sand. I’ve invested considerable amounts of time, and would rather have a fair outcome of just letting my entries stand, but at this point have no recourse working with the company. Can I sue in small claims court for time spent entering the competition and following up with the company at my hourly total compensation rate?


  21. I’ll reiterate what others have said. Greatly applaud taking on Citi over this!

    For everyone reading, you want to avoid anything close to this experience obviously, so don’t hoard all of your points in one place where a shutdown like this can be devastating. Have to diversify!

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