The Amex war on gaming heats up

The next stage of the Amex war on gaming begins tomorrow, November 1st. In August we reported that Amex had added anti-gaming terms to their signup offers.  Signup offer terms now state:

If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome bonus offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain a welcome bonus offer (s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit Membership Rewards® to, we may freeze Membership Rewards® credited to, or we may take away Membership Rewards® from, your account. We may also cancel this Card account and other Card accounts you may have with us.

And in September we reported that Amex was actually enforcing their age-old terms against gift cards counting towards minimum spend requirements.  So far, we only know this to be true of gift cards purchased at Simon Malls, but it seems likely that they’ll spread the joy to other gift card markets.

And now, effective November 1st, Amex has updated the terms on their Membership Rewards cards to disallow abuse, misuse, or gaming in connection with earning or using points.

Amex has declared that they have sole discretion to determine if you’ve broken their rules.  If you have, they may take away your points, cancel your accounts, or temporarily suspend point earning or redeeming.

What is abuse, misuse, or gaming?

The definitions of these terms haven’t been spelled out.  Basically, Amex has declared that they will decide if you’ve done these things after you’ve done them, and that punishment will follow. They did give some hints in their anti gaming signup bonus language, though.  They gave the following examples:

…for example, if you applied for one or more cards to obtain a welcome bonus offer (s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount

In other words, with respect to signup offers, “abuse, misuse, or gaming” equates to any ways of obtaining a signup offer other than how they intended.  You should only use signup offers that are meant for you, you shouldn’t do anything “sneaky” to meet minimum spend requirements (such as buying gift cards or buying and returning items), and you shouldn’t cancel the card soon after getting the bonus.

If we apply similar logic, we can try to figure out the definition of “abuse, misuse, or gaming” in connection with earning or redeeming points.  Amex wants us to earn points through regular spend and to redeem points for ourselves.  I can then guess at the banned activities…

Abuse, misuse, or gaming when earning points

My educated guess is that Amex is on the lookout for the following activities with respect to earning points:

  • Large gift card purchases.
  • Frequent gift card purchases with vendors that trigger bonus categories.
  • Abnormally large purchases within bonus categories, especially if there’s any sign that there is some sort of purchase and return scheme going on.
  • Very large credit card spend that far exceeds a person’s apparent ability to pay.  My guess is that they will watch this more closely with personal cards than business cards since large business purchases are common and normal.
  • Earning points through Amex offers on many different authorized user cards.

As I learn about other examples, I’ll update this list.

Abuse, misuse, or gaming when redeeming points

My educated guess is that Amex is on the lookout for the following activities with respect to redeeming points:

  • Selling points.  Indicators of this may be frequent point transfers to many different authorized users’ frequent flier accounts, for example.
  • Buying airfare with the Business Platinum buy with points rebate and somehow getting the airfare refunded.

As I learn about other examples, I’ll update this list.

Analysis

In the last few years Amex has made their credit card lineup more and more competitive.  They’ve continued to offer great signup bonuses and they’ve added bonus categories to existing cards and introduced compelling new cards such as the Everyday Preferred and the Blue Business Plus.  With the latter, for the first time ever, we have have a card that earns 2 points per dollar for all spend (up to $50K per year), and those points are transferable to airline miles.  It’s an unbeatable combination.

Obviously I’m unhappy about the Amex war on gaming, but I get it.  Amex naturally wants those signup bonuses and card features to attract profitable new customers and to retain existing ones.  Customers who use them only for signup bonuses or only for bonus category spend are financial drains.  Amex quite reasonably wants to discourage that behavior.

I also can’t fault Amex for failing to spell out the definition of “abuse, misuse, or gaming.”  They know very well that if they did so, people would seek out and find loopholes.  What are the opportunities that Amex hasn’t banned?  Heck, I’ll admit it… I’d be working on that too.

Amex hasn’t yet applied anti-gaming rules for earning and spending points to their other cards (cash back cards or co-branded cards), but I’d guess that it’s just a matter of time.  We need to live within the new Amex reality if we want to continue to enjoy the benefits that their cards offer.

What to do

You can still sign up for Amex cards for the signup bonuses, but you need to be careful to meet spend requirements in ways that Amex won’t see as gaming.  Obvious options are to use the cards for all spend, and to prepay utilities and other bills where possible.  You can organize events and ask friends to pay you back.  You can pay for covered healthcare expenses and have the insurance company pay you back.  You can fund Kiva loans.  You can pay estimated federal taxesYou may be able to pay miscellaneous bills where credit cards aren’t usually accepted if Plastiq ever fixes their current Amex problem.

Once you’ve earned your signup bonus, ideally you will continue to use the card for everyday spend.  I don’t think that Amex will complain if you restrict a card’s use to it’s bonus categories — as long as it is regular spend.  If you buy lots of gift cards, especially within bonus categories, I doubt your account will last long.

If you don’t want to pay a card’s second annual fee, wait until the annual fee posts to your account and then call to see if they’ll give you a retention offer.  There’s nothing wrong with that.  If they offer you something that is worth the annual fee, then pay it.  Otherwise cancel or downgrade to a lower annual fee card.  If you want to do that latter, though, make sure that you’ve had the lower fee card before.  If not, you should look to signup new for that card so that you can get a new signup bonus before it’s too late.  Amex has a pretty strict “once per lifetime” rule with their cards, so you don’t want to blow your chance at a signup bonus by downgrading your card.

Keep in mind that Amex cards tend to have the best benefits around. Many are worth their annual fee for their benefits alone.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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  1. Much of this I can understand, for example, canceling a card within 12 months. However, someone is clearly making money on the sale of large gift cards, or there wouldn’t be so many for sale, and sometimes even with substantial incentives, like fees waived, or gas points given from grocery stores. Heck, I don’t think the Giant grocery stores and in my area would have resumed selling them unless there was a lot of money to be made. I’m not sure why Amex wouldn’t come out ahead on gift card purchases, with the possible exception of bonus categories? Interested in your thoughts. So, for example, would you advise no more purchases of gift cards from grocery stores with the PRG card with the 2x category?

    • I agree: they almost certainly profit from gift cards purchased with no bonuses involved. But, bonuses aren’t limited to just category bonuses. There are bonuses for signing up, sometimes for adding an AU and meeting spend requirements, for Amex Offers, etc. And then on the other side, we don’t know how much they pay airlines for their miles. When people always use their points by transferring to miles, Amex may lose money even if all points were acquired at 1X. That can especially happen in very large numbers when people sell their miles. So, I think that Amex has decided that they simply don’t want people gaming the system even if some of those gamers are profitable for them.

      Re buying gift cards at grocery stores for 2X: I don’t know. My bet is that it’s fine in moderation, but we simply don’t know if/when Amex will focus on those types of purchases (to-date they haven’t cracked down on those).

      • Really a crazy situation for those of us who use the system for Delta status. I pay two $450 annual fees, plus, when I am completed, these are 1.5X purchases, plus whatever Delta charges them for the MQM. I’m betting I’m right on the edge of profitability. Would they really shut down a $450 annual fee card user? My guess is no, and I am willing to gamble I’m right, particularly since I’d only do enough to keep plat with new rules to be safe. (My regular flying is around 50 mqm)

        Thing that still cracks me up is that Amex/Delta basically encouraged this when they set the 25K min spend MQD waiver policy……

        • ….not to mention, there are many businesses which legitimately purchase vast quantities of GCs as promotional items. So they’ll be alienating a lot of customers while banning a few small time gamers. Now that the bonus can only be had once per lifetime, this move makes no difference.

      • I understand their logic for banning MS on sign-up bonuses, but they’re delusional if they think it’ll stop gaming. Many of the points afficionados aren’t exactly poor and can easily sub some kind of other spend, but it doesn’t mean they’ll magically turn into profitable customers just because they don’t buy GCs. I just pay my taxes to meet minimum spend now, and I’m not any closer to actually using the cards because they provide no value to me.

        • Yes. I think gc are run as a different txn. The GC have an indicator in the transaction message that the terminals set.

        • It depends on the data the store provides. Google “Level 3 data” and you’ll find that different stores report different amounts of data on your transactions. But yes, it’s certainly possible for Amex to know exactly what you’ve bought.

  2. I stopped considering Amex cards and shifted my actual business spend to other card issuers. Amex is alienating business owners by going overboard on some of their rules. Many of us already left them last year. I may MS some, but I also have a lot of regular spend and they don’t deserve that nor my family’s regular spend transactions. They targeted the wrong group of people. I’ve almost forgot what Membership Rewards is. Even though me and my family were donating all our points to charity through Amex’s own charity program they still burned us. That RAT department didn’t even care that we gave our points to charity. Other banks don’t seem to burn bridges to business customers as much as Amex has done. And, I’ve heard Chase loves how Amex has treated some big spending business owners; Chase ended up with a lot of new accounts including business checking and investments because some of us got burned by Amex.

    • Give us a break. Anyone playing the game with any intensity vastly exceeds 5/24. Amex was far and away the best for MS in scale and Amex offers.

    • Article says close account level. So unless your cards are under different accounts (I.e. you have more than one Mr bank) you’ll get them all closed if they so choose.

  3. Is Amex waiting for 11/1 to close down some accounts based on past usage? I may transfer quite a few Rewards points to partners today; I don’t want to have my accounts cancelled and the points clawed back. I’m concerned they will look at our history with Amex as much as the present and future. My history with Amex has been to sign up for cards multiple times, spend for the signup bonus (some MS), and then drawer the card, occasionally paying the 2nd year annual fee and using the card only for Offers and bonus spend. I have also used business cards for what may appear to Amex reviewers to be non-business spend. I don’t want to gamble losing my points.

    • Highly doubt they’ll apply new terms retroactively. Obviously I could be wrong, but prior things can’t be held to new rules and I think it would open them up to lawsuits.

      They will certainly be able to model based on your history. But the only thing that will matter is spend going forward.

    • Agree – laughable.

      So many MSers seem to think they are “highly valuable, longtime customers” whose business these companies would never want to lose.

      WRONG! Could not be more wrong, in fact.

  4. There seems to be a lot of assumptions here. Amex won’t be “alienating” current card members. They aren’t going to ban you for just a few purchases. I doubt if you buy 10’s of thousands in gift cards included in your 10’s of thousands of regular spend, you’ll have a problem. Biz customers are important and they certainly don’t want to lose them. The point is to stop people from artificially earning points and costing them money.

    Amex has extremely sophisticated transaction modeling in use today. They are just defining new parameters and sticking it into the model. My guess is the rules were created and put into test in August and they have been monitoring them since. They’ll also continue to monitor them. If it’s too wide of a net being cast, they’ll pull it back and vice versa

    • How is a business spending $100k on supplies different from spending same money on GCs? Same interchange fees, and “gaming” isn’t just how you earn, but how you burn. People don’t need to do MS to squeeze out maximum benefit from the rewards and therefore still be unprofitable. AMEX is on a witch hunt/wild goose chase….pointless rules that won’t get them what they want. Maybe they should focus on making MR program great again and making people want to spend on the cards vs. holding them just for benefits.

  5. I’d love to leave amex. They’ve really gone down the tubes the past year or two. The problem is that as far as spend ability goes, nobody that I’ve found comes close to amex charge cards. If I can spend $150k on a chase ink card, I can spend $500k+ on an amex business charge card without blinking. For my business, this is crucial towards our cash flow. If anyone has any suggestions of other banks that have either very generous credit lines or very flexible spending ability, I’d love to hear.

    • If you spend so much in one go, have you tried negotiating with your suppliers to just give you a 5%+ cost discount and pay cash, instead of receiving reward points of dubious value.

  6. Seems to me that AMEX might enforce these vague stipulations more on sign up bonuses than bonus spend(which encompasses almost all cards in some way).
    We had a Platinum 100K bonus pulled back by using gift cards and some organic spend.
    We’ve never had an issue(yet) using Delta Amexes to buy gift cards(debit/PIN) in addition to usual spend for annual Skymile/MQM spend. Maybe this is what AMEX is shooting for now.

  7. I understand the need to ban “gamers”. Some of these blog writers brag about applying for multiple cards at the same time and then cancelling within a month to avoid fees. But the rest shouldn’t be punished. Just lifetime ban those guys.

    Amex used to be the premier card nobody could touch. Amex gold used to mean something. Now citi and Chase have comparable products or better.

    Lots of merchants don’t accept amex because they are a pain in the ass. Costco dropped them.

    RIP amex

  8. Amex is like an uncreative manager who cannot bring new ideas that will lead to revenue generation but only think of downsizing people or space to cut down cost to look like increase of revenue.

  9. DP:
    I bought $413.90 worth of Visa gift cards at Staples last week and they counted towards min spend because they helped me get over the hurdle… already got my bonus.

  10. Bottom line for me: Historically, MS on the Surpass (to earn Diamond status) has been considered “Safe” and these warnings were primarily directed towards premium and MR cards. Is Surpass still safe or is the point of this update that Amex is expanding to ALL cards?

      • Hey FM. Appreciate the response. While what you say is technically true, when AMEX changed TC for the SPG, Delta and Hilton Honors cards, there were new terms which allow Amex to delay issuing rewards for up to 12 weeks. Thats 3 damn months. The change is effective November 1, 2017 as well. I take that to also be “war on MS terror”.

        If its simply to delay the points, then thats not too bad considering MR TC explicitly mention the ban hammer if they see “abuse, misuse, or gaming”, but why the difference in TC between MR and cobrand? Dont know, but I pretty much take it as the same thing. Meaning, Amex needs that delay on 12 weeks to verify “abuse, misuse, or gaming”.

  11. Most of AMEX cards will go into my sock drawer until i cancel them. My spend will go toward mostly on Chase.
    Bye bye AMEX

    • Seems like a smart move. Chase is becoming the Amazon in the credit card industry while Amex has already become the Sears. I remember when Amex and Sears were great in the 90s, but they both are out of touch.

  12. They held up bonuses on my SPG and Hilton Surpass card. I was 100% organic spend. After i get my points from SPG and Hilton, i will close the cards immediately. Tired of AMEX’s games. Luckily its once in a lifetime anyways, but my family is definitely moving our daily spend business to BofA for all the wonderful Alaska cards they give us. We should reward our business to banks like BofA and Citi, that never tried to jack us of bonuses. Citi has never short changed me on an AA bonuses.

    • I have never heard Amex holding bonuses on non-MR cards. How long did they hold your bonuses? and had you already done anything of RAT interest on one of your MR cards?

      • There have been a number of similar reports in recent months of bonuses on the hotel cards being delayed (both signup and AU bonuses). Those reporting this issue have said that Amex confirms that they’ve meet the bonus requirements but a technical issue is slowing down the posting of the bonuses. I haven’t had personal experience with it, but I have heard talk about it. Hopefully that speeds back up.

  13. They finally hired someone with the balls to do this. Give me a break, if you were in charge of this department would you READ THESE BLOGS?

  14. So earlier this year when the Amex SPG had the 35k offer I spent $1500 to add to my Amazon funds. This is banned now? It was completely legitimate and intended to use those funds for the holidays by the end of the year.

    • I don’t read it to mean that reloading your Amazon balance for $1500 one time is a banned activity. I read it to mean that if you’re buying tens of thousands of dollars in Amazon gift cards and you seem to be doing it by adding 99 authorized users and using the same Amex Offer 99 times and only using the category bonus on Card XYZ to do it they’re going to shut you down. I’d be surprised if one $1500 purchase reloading you balance at Amazon gets you shut down. I obviously don’t know for sure, but I don’t think I’d be concerned about that.

  15. This is not true that Amex BBP is the first card to give 2 points for everything. Barclays had at least 2 cards like that: Wyndham and Priceline. Both earned 2x on everything.

    • I think Greg meant it was the first time ever that a card is earning 2 points per dollar everywhere (up to $50K) that are also transferable to airlines. There are other cards that earn 2x everywhere, like the Capital One Venture Card in addition to those you mentioned. But those points are just worth a penny apiece and can’t be transferred to airlines (or in the case of the Wyndham card they can only be used for Wyndham hotels – the transfer ratios to airlines are poor). The Blue Business Plus is notable because it earns a flexible currency at 2x everywhere on up to $50K in purchases annually.

      • Not true. Priceline point worth 1.67 cents. Wyndham is variable. But you’re right this is the first transferable 2x. I want UR version of this card!

  16. Not sure I agree with your list. I would think Amex wants to stop people from getting sign-up bonuses in certain ways, wants to stop the selling of points and wants to stop “airline” refunds that aren’t really airline purchases, and that’s it.

    Earning regular points on buying gift cards earns them money just like any other purchase. Unless they consider that you are a financial risk, I don’t see why they’d want to stop that. Closing accounts due to financial risk is separate from the points issue. Things like earning Amex Offers on multiple cards can’t be significant, but that’s a guess.

  17. Safeway Just4U offering $10 off $150+ gift card purchase. With AMEX increasing scrutiny on Membership Rewards cards, do you feel comfortable using an AMEX Everyday Preferred to purchase a $500 gift card in conjunction with this deal?

  18. Will adding the Amex Offers across several cards (using the new browser page trick) be considered “gaming” the system with the potential to be shut down?

  19. What this tells me, at least, is that if one is angling to get a bonus but nix the card after less than a year, one should probably have a transfer partner (and ideally a short-term redemption) in mind. Of particular interest is the fact that when pushing the DL Gold Amex, Delta’s representatives explicitly (and repeatedly) pushed that the fee was waived for a year “so you can decide if the card is right for you” (or very similar words). If Amex were to try and claw points back on the basis of cancelling a card sold as such, that would make for an interesting court case.

    Also interesting will be any clawback attempts where the card was acquired prior to this change…I can just see the argument going around in circles: “You cancelled your card because you never intended to keep it.” “No, I cancelled it because you altered your T&C and I didn’t agree to the changes.”

    Of course, /that/ raises an interesting question: If someone cancels a card shortly after a T&C change is announced and Amex decides to penalize them for it, “sole discretion” aside I’d like to hear a lawyer talk about /that/, since a (potentially quite punitive) penalty for cancelling a contract after the other party unilaterally altered it seems rather coercive (and potentially unconscionable) to me.

  20. I have been using my American Express Preferred Cash card to buy Amazon gift cards at my local Kroger when they offer 4 times fuel points along with my normal grocery spend. I would guess my spend is about half on groceries and half on gift cards. Will this affect me?

    • I buy most of my groceries at the local Kroger and don’t own a car. Is there any kind of secondary market in this fuel points?

      • There is, but it’s harder than it used to be. Used to be able to just grab new loyalty cards, load them up, and sell before registering. Now usually you have to download/activate a coupon first.

        Check ebay to see what’s current.

  21. If I Am going to cancel a card without paying the (second year ) annual fee, when is the wisest time to cancel — at 11 months, days before the fee posts, or within a couple of weeks of the fee posting?

    Also , is it ok if my minimum spend is met on day 1 with a plastiq payment for (Canadian ) taxes? I am Canadian and my Amex cards are Canadian.

    Thank you

    • I think the consensus was to cancel 29 days after the fee posts.
      You’ll get a full refund of the fee plus it gives you 29 days to use Amex offers should you get any.
      In any case, there have been retention offers lately too so you may get one as well if you call.

  22. Yes, I noticed this on my recent Delta app (targeted as well). Makes it hard as my largest payments cannot be made using AMEX (only VISA or MC), so I used to buy VISA gift cards which could then be used to make those payments.

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