Amex ratchets up their war on gaming with wave of shutdowns

Last week, Reddit was aflame with reports of Amex shutting down accounts.  While account shutdowns have long been common with other issuers, this hasn’t been Amex’s primary approach in the past.  For many years, they temporarily froze accounts in order to put them through financial review.  If the cardholder came out of the financial review successfully, their accounts were fully restored.  More recently, we’ve seen Amex clawing back points that they decided were earned through “gaming”.  Now, Amex has taken enforcement to the next level with complete account shutdowns.  Fortunately, they’ve allowed those shut down to transfer out their Membership Rewards points by calling in.

Who was targeted?

TNSepta, on Reddit, has done an amazing job in collecting and analyzing data from those who were shutdown and those who were not.  To-date, TNSepta’s analysis suggests that those targeted for shutdown were likely to have either or both of these risk factors:

  • Self refer (e.g. did they earn points by referring themselves to a new Amex credit card?)
  • Multiple of same card (e.g. do they have more than one of the exact same Amex credit card?)

In reading through the shutdown thread (found here), it looks to me like some of those who were shutdown but didn’t self refer reported that they had played “two player mode” by doing multiple spouse referrals.  I don’t take this as evidence that this is a risk factor, but it’s something to keep in mind.

What else do we know?

A comment on Doctor of Credit’s post about Amex shutdowns grabbed my attention.  While I don’t have proof that this is legitimate, I find it convincing.  This is from someone with the handle RAT Poison (FYI: “RAT” is the Amex Rewards Abuse Team):

I won’t say why or how, but I have insider info from RAT on what’s behind all this. This shutdown is part of a series of upcoming shutdowns. This week’s was a beta test for a new machine learning model specifically designed to target churning activity through unsupervised learning. Amex data scientists are improving an evolving neural network model that identifies churning behavior as it happens, and then assigns risk scores that factor in to anti bust-out or fraud scores. They’re treated the same, those all have different scores but their values affect your overall risk/reward score for Amex. If that overall score reaches a certain threshold (which they’re still experimenting with what exactly it will be), you will get shut down. What they’re doing is based on the same ML models that are used at Amex for AML and fraud prevention. The shutdowns will happen in small waves because one giant hit would be a massive drain on resources and disruption to their overall business, including drawing negative public attention outside of the churning community. That would scare people who are profitable but think they’re winning. They are also incrementing shutdown waves because of the resource usage it takes to identify accounts and assign a score based on the new indicated risk factors. When shutdowns are triggered, they begin combing through the new dataset. Right now, the model only looks back two years.

The clawbacks on self-referrals were a pilot program to this week’s events, not an entirety separate event. The same model that identified self-referrers was used for these shutdowns.

I’ll report back when I hear more info.

RAT Poison adds:

Also, I should add that if you had self-referrals clawed back, you’re already in the main data set. Those who were hit by the clawback were flagged as the highest priority for the model to comb through because of the strong correlation to proven churning/gaming behavior. Self-referrals were like a litmus test for who will be the low-hanging fruit for them to cut. As they tune the model to identify more positive activity correlations with churning, it will get more specific. Combing through level 3 data will become more prevalent in identifying churners, especially true if you have transactions from GCM and other obvious sites in your transaction history. If you were hit in the clawback but weren’t shut down this time, be cautious that you’re in their crosshairs. From what I’ve learned about the model, the inferred course of action here to avoid a shutdown is to not do anything with Amex except organic spend on your existing cards. Don’t carry a balance, no more MS, and no new cards. Keep in mind that the anti-churning model is fundamentally based on the neural architecture of their anti-fraud model.

PS I’ve read many comments loosly speculating about what RAT is. RAT isn’t a bunch of guys in India who are manually combing through the accounts with high MR balances, or checking referral sources for validity, etc.. This isn’t true. “RAT” is two data science and machine learning engineers in Phoenix who transitioned from the Amex fraud prevention team. There are two other engineers who have shared responsibilities with RAT and other anti-fraud teams.

And RAT Poison says that the Hilton Aspire no-fee link was unrelated:

The Hilton Aspire no AF link had absolutely nothing to do with these shutdowns. It’s a pure coincidence. The portfolio of recommended accounts to be shut down was sent off for approval more than a week ago. RAT doesn’t shut down accounts. They provide tranches of customer accounts suspected of abuse – along with correlating data. Those tranches go to evaluation from non-engineering management; who are the decision makers on shutting down a tranch of accounts or enacting other penalties. This is new to them and it’s somewhat uncharted territory, the speculations on here and on Reddit that they’re winging it are accurate. Their plan is to cut losses and effectively disable Amex churning first, then deal with the fallout afterwards. They’re legally within their rights so shutdown approvals are not made on a legal basis.

Summary of RAT Poison’s comments

Here’s my summary of the above:

  • The RAT team is using a machine learning model designed to identify gaming behavior
  • This first set of shutdowns was a pilot program.
  • Expect to see more shutdowns come in waves
  • If you had self-referrals clawed back you are already a person of interest
  • The model currently only looks back 2 years (so if you did lots of “gaming” more than 2 years ago, that shouldn’t affect you now)
  • Soon they will enhance the models to inspect level 3 data (e.g. the individual items you purchased, not just the store and overall purchase amount).
  • Beware of purchases made with obvious gift card sellers like Gift Card Mall or GiftCards.com.

And RAT Poison suggests that if you are likely to be a person of interest to them, you may be able to avoid getting shut down by doing the following:

  • Use your Amex cards only for organic spend.  Do not manufacture spend.
  • Don’t carry a balance
  • Don’t sign up for new Amex cards

A summary of risky behavior

Based on the data collected through Reddit, along with the comments from RAT Poison, we can conclude that the following behaviors may get you flagged by Amex for potential shutdown:

  • Referring yourself to new Amex credit cards
  • Holding multiple of the same Amex credit cards
  • Buying gift cards from obvious gift card sellers like Gift Card Mall and GiftCards.com
  • Future: Buying gift cards from stores that supply level 3 data to Amex

What should you do?

If you find that you’ve been shut down: Call Amex immediately to use up your Membership Rewards points.  If you have the Schwab Platinum card, you should be able to cash out your points for 1.25 cents each.  Alternatively, transfer points to an airline partner.  You can find a list of Amex transfer partners, including notes about each one, and a list of current transfer bonuses, by clicking here.

If you have previously had points clawed back due to self-referring: Consider transferring out your Membership Rewards points now, especially if there’s a transfer bonus that appeals to you.  It may be too late to avoid shut downs, but it might help to avoid all “gaming” activity on your Amex cards.

If you have self-referred in the past, but didn’t have points clawed back: It seems likely that you can avoid a shut down by avoiding all “gaming” behavior going forward.

If you have multiple of the same exact Amex cards: It seems likely that you can avoid a shut down by avoiding all “gaming” behavior going forward.

Others: Avoid obvious “gaming” behavior

How to avoid “gaming” behavior

To stay off of Amex’s radar for shut downs, these steps may help:

  • Do not refer yourself for new Amex cards.
    • Extra cautious: Do not refer family members in the same household and do not accept referrals from those in your same household.
  • Do not sign up for Amex cards that you’ve had before.
  • Do not sign up for Amex cards using “special links” (e.g. when a link is found to a special offer, but it’s unclear where that link came from or whether you should really be eligible for the offer)
    • Extra cautious: Don’t sign up for any new cards at all.
  • Do not buy gift cards from Simon Mall, Gift Card Mall, GiftCards.com, or any other merchant that is obviously primarily a gift card seller.
    • Extra Cautious: Don’t buy gift cards in order to earn bonus points (e.g. don’t use Amex Gold to buy gift cards at US grocery stores)
    • Extra Extra cautious: Don’t buy gift cards at all with Amex credit cards
  • Do not cycle your credit limit.  E.g. do not run up your credit mid-cycle, pay it off, then run up your credit again multiple times.
  • Pay your credit card bill in full each month.

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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Regarding comments: Comments posted at the bottom of Frequent Miler pages and posts are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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[…] Update: Just saw Frequent Miler post about it shortly after my post went live: Amex rachets up their war on gaming with wave of shutdowns. […]

CaveDweller
Guest
CaveDweller

Good Blogger and post IF u spend the money u get the points . The banks don’t make money on most of us.
CHEERs

Jacinto
Guest
Jacinto

Which vendors report L3?

ddt
Guest
ddt

It seems Staples reports all the items I purchased in a transaction, including gift cards (brands + amount)
Is that L3?

HoKo
Guest
HoKo

Two questions:

1. How can we tell whether a vendor provides L3 data? Specifically I want to know if the grocery stores that I use for AMEX rose gold report L3?

2. Do we know if just one self referral is enough to get you punished?

Rdover1
Guest
Rdover1

From past threads it appears that CVS, Safeways brands, Simon’s Mall and probably 711 all give L3.

A number of years ago L3 was costly to implement, now there is almost no cost, so assume by default it will be L3 going forward. All merchants have had to retool for chip readers, which would have included an update to their merchant agreements with the CC companies. I wouldn’t be surprised if that led to a big wave of adds to L3 provision as part of the process.

JohnnieD
Guest
JohnnieD

So what’s the point of having amex cards if you don’t ms on them? (Thinking of gold and OBC)

toomanybooks
Guest
toomanybooks

I am wondering the same. Also asking the same question as others: How do you know which companies report L3 data?

I am thinking back on all the people who laughed at me telling them not to self-refer and cycle credit and otherwise push things. Hahahahaha

ithrowpoop
Guest
ithrowpoop

Agree with JohnnieD. There is no point in paying a $250 annual fee on the gold card if I can’t buy some GCs to boost my points. Amex is not accepted at a lot of restaurants and is not convenient to use in general. I think I’ll cool off for a few months (maxed my 25k anyways) and gradually ramp up in spring of 2020. If they close my account, so be it. If i can’t MS on the gold, there is no point for me to have it anyways. Organic grocery spend does not offset the annual fee.

Nun
Guest
Nun

> “From what I’ve learned about the model, the inferred course of
> action here to avoid a shutdown is to not do anything with Amex
> except organic spend on your existing cards.
> Don’t carry a balance, no more MS, and no new cards.

Don’t carry a balance? Not that I do but it doesn’t sound right. I’m calling BS on the supposed mole.

As long you’re not seen as a “break out” risk, why would Amex care about GCM? They’re making money from the purchases, are they not?

HChris
Guest
HChris

I agree with you on the carrying a balance. Like you said, If you carry a balance and you’re not at a breakout risk, they are making money on interest charges. And you are probably right in the fact that they make money off of your GCM purchases because it is only 1x on most cards. However, I think the system recognises you as churner and gamer through GCM and that you have a high risk of using other Amex cards for gaming purposes on categories where they might lose money on you, for example the Gold card on grocery stores.

CaveDweller
Guest
CaveDweller

HChris
What their doing finally is getting rid of the Gamers . Not because of the gaming but because they usually do high risk $$ stuff and 1 year from now everything could tank as in 2009 . It’s nice their getting 20%+ interest BUT if they lost the principle what did they gain Nutthing . AMEX is Way out there too but they make it up with interest rates and FEEs so far .
Look at the annual fees too I bet 99% of the people can’t pay that and I have ONLY 1 too.
CHEERs

Gosavorla
Guest
Gosavorla

I believe carrying a balance is referring to floating 0% APR.

Rdover1
Guest
Rdover1

It is logical to assume Amex wants you to carry a balance to earn more money, but the banks do a balancing act (pun intended) between letting you extend yourself but making sure they are not at risk of not getting their money back.

As such anyone who carries a balance will fall in to the data set of risk accounts that ‘RAT poison’ was referring to.

Now, realistically, just being in that pool if you have good credit doesn’t equal much risk, but I think ‘RAT poison’s’ point was to try to stay out of that data set entirely,.

farnorthtrader
Guest
farnorthtrader

Also don’t understand about carrying a balance, but they care about GCM because manufactured spend looks exactly like money laundering (even though it isn’t) and there is no way for them to tell it apart. AMEX does not want to run afoul of anti money laundering laws.

Nun
Guest
Nun

I disagree that buying a gift card with a credit card “looks exactly like money laundering.” The credit card purchase is entirely traceable so it’s not laundered. I suspect Amex is more concerned with “break outs” from buying gift cards to rack up your balance. IMO

HChris
Guest
HChris

Does anyone know if Rakuten (former Ebates) shares with Amex on where you collected your points? As far as I know, Rakuten just buys Amex MR from Amex in huge bulks and then distributes them to the portal and credit card users according to their spending. Would you be safe by continuing using the Ebates/Rakuten credit card through their portal and buying GC from places like GCM as it is not an Amex issued credit card?

HThree
Guest
HThree

I think you’re 100% safe to buy GC with Rakuten/Ebates card. The Rakuten card is a Visa card, so I would assume that your only worry is more Synchrony bank, not Amex. Rakuten buys MR, so you should be good.

*Someone correct me if I’m wrong*

JL100
Guest
JL100

Seems crazy to me that they ever allowed self referrals – wouldn’t that be the most obvious scenario you would not pay the points in the first place?

tro
Guest
tro

From an IT perspective, “allowed” most likely means didn’t add extra checks to safeguard against this specific scenario in whatever automated system handles the bonus referrals.

C H
Guest
C H

How can we tell if a grocery store reports L3 data?

Jags
Guest
Jags

The pay off your credit card bill every month just doesn’t make any sense to me. I’m currently carrying a huge balance on the Blue Business Cash card — I have the $250 + $250 offer for spending $15k in the first year. They gave me 0% APR on purchases for 12 months. Why wouldn’t I want to float this money and earn some interest in the bank?

AMEX actively encourages its customers to carry a balance. I suppose if you bought $15k of gift cards from GCM that could be a worry but paying taxes?

Money
Guest
Money

I am in the same situation. I think if they didnt want people using it they wouldn’t come up with the product.

Evan
Guest
Evan

Not saying these new rules don’t make sense. However, it seems the basis of the suggested rules comes from one source the “rat poison” post. The “rat poison”post is very detailed making it seem credible but what if it’s BS?

THEsocalledfan
Guest
THEsocalledfan

The biggest problem with these discussions is this is all about trade offs and what you value. For myself, I value Delta status, thus I need to do some manufacturing to keep that status. Is that risky? Maybe, but if I don’t do it, I don’t get Delta status……..thus the conundrum. So, I probably will keep pushing it a bit, and hope Amex is fine with it since they cut my spending miles earning by 33%……

MSer
Guest
MSer

Meh, if they want to close me, so be it. Been a great run and Amex owes me nothing but fond memories. Until that time, it’s business as usual…

CaveDweller
Guest
CaveDweller

MSer
Me too’s it’s been an Unreal Run just for 10 years ..
HaHa
CHEERs

Parts Unknown
Guest
Parts Unknown

Cannot agree more. I’m transferring out as I earn instead of stashing. I think it’s a fairly large risk, but I don’t think the amateur detective work on Reddit is all that useful.

CaveDweller
Guest
CaveDweller

I did that before on my 2 last card applies don’t let them Burn You..
CHEERs

FreeIsGood
Guest
FreeIsGood

Thanks for the thorough update, FM.

Big question is whether they want to go back and look at airline fee credits for gift cards. And if it’s worth trying any kind of tricks with those fees in 2020.

Myself, I have the Platinum and Aspire… Not sure I can get full value out of $450 in airline credits if only good for fees in 2020.

Also worried they could spot ‘fake’ businesses pretty easily. Have a nice Bonvoy Business card offer they emailed me, but thinking twice about it. I mean if they wanted to ID a lot of things, the data is already there and business cards are low hanging fruit IMO.

Lynn
Guest
Lynn

Many of us have 2 Hilton cards. Are those included too or just those cards earning Membership Reward Points?

Money
Guest
Money

I don’t agree with the point regarding carrying a balance. It is absolutely not true. Othetwise, why would Amex make all of their charge cards “pay over time” AND give points for opting in pay over time. Also, when we call to cancel card we should mention that there are too many rumors of shutdowns and clawbacks and that it is giving an anxiety to earn and keep MR points. Eventually they will listen

Raghu Narayanan
Guest
Raghu Narayanan

Greg
When you say multiple versions of the same card, I have the amex everyday card for myself. I am also a AU on Amex everyday card with my wife. So is that a red flag?

JB San Diego
Guest
JB San Diego

Where not in Kansas anymore!

Just glad my account is still alive!!

Best to stay low for a while and monitor the RAT!

CaveDweller
Guest
CaveDweller

Who cares about Kansas ? Just booked my Mykonos hotel for Sept @ 0400 could be more fun .
CHEERs

Sam
Guest
Sam

If they shut you down do you still get to transfer out your membership rewards or you lose them?
Chase gives 30 days to transfer out after shutdown.

CaveDweller
Guest
CaveDweller

Sam
I think here they are missing the point .WHAT HAPPENS TO YOUR FICO SCORE AFTER THEY BONE YOU ??????
I had to Share that as in a future loan or just living if they trash ur FICO as in more $$$.
CHEERs

Dan - Legal Bank Robber
Guest
Dan - Legal Bank Robber

Your FICO score wouldn’t be effected really besides a higher credit utilization. Closed accounts continue to age on your FICO report for 10 years.

CaveDweller
Guest
CaveDweller

You Sure the Account is Closed by the Bank and all is Well and Good ..Hmmm and it’s 7 yrs not 10 years and 10 years for a BK .
But then Who Cares .
CHEERs

mark
Guest
mark

I am a bit puzzled about what behavior exactly Rat Poison is trying to warn us about. He mentions “churning” a lot, but also quite a bit about manufactured spending. I thought “churning” referred to getting a welcome bonus on a card, cancelling it, and then later getting another welcome bonus on the same card. Manufactured spending is a second type of “bad” behavior. But what started it all was the self-referral, which is neither one of these two things.

AlexL
Guest
AlexL

“Self-referrals were like a litmus test for who will be the low-hanging fruit for them to cut.” The logic is if you did self referrals, it is more than likely that you are also “churning” or ms.

Dan - Legal Bank Robber
Guest
Dan - Legal Bank Robber

The dudes spewing bullshit. No one with that knowledge cares to help or warn us.

Mike B
Guest
Mike B

Would this apply to Delta AMEX Cards? While they are AMEX cards, they earn Skymiles rather than MR points. Thus, shouldn’t Delta get to decide how their points/miles are earned. AMEX should only be able to decide how their MR points are earned and these new RAT measures should only apply to cards earning MR points, unless the specific co-brand carrier asks them to apply the same monitoring efforts.

trackback

[…] Miler wrote an interesting article about how American Express’ recent account shutdowns were only the beginning of an AI-driven progression of their Rewards Abuse Team (RAT) program. We’ve taken it slow and steady with AMEX since I’ve been a cardholder since 92 and […]

trackback

[…] recent reports of Amex shutdowns on Reddit as well as Flyertalk.  Frequent Miler blog also has a post with a good summary of what’s happening. In a nutshell, it appears that self-referrals are the culprit and the trigger for the shutdowns. […]

Jo p
Guest
Jo p

It’s alarming that the target number of shut downs is so massive that Amex doesn’t want to do it all at once because it would drain resources and potentially have a backlash from consumers.

Rick
Guest
Rick

“Don’t carry a balance, no more MS, and no new cards”

What is MS in the above statement from the article? Thanks.