Amex Adds Strong Language To Counter Bonus Abuse

The credit card issuers sometimes adjust the terms associated with their welcome bonuses. They want to encourage profitable consumer behavior, so they don’t want people applying for credit cards solely for the sign-up bonuses, or applying for offers that weren’t intended for them.

For example, over the past several years American Express has changed the terms of most of their credit cards, limiting the welcome bonus to those who haven’t had a particular card before. So most Amex sign-up bonuses are now “once in a lifetime.” Previously the bonuses weren’t available to those who had the card within the past 12 months.

American Express has added an interesting restriction to the terms of one of their cards, per Doctor of Credit. As of now these terms seem to have just been added to the Delta Gold American Express, and not any other American Express products (though I imagine that could change). Specifically, they’ve added the following regarding qualifying for the welcome bonus on the card:

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 bonus miles to your account. We may also cancel this Card account and other Card accounts you may have with us.

So American Express is reserving the right to close accounts and take away bonus points if you:

  • Apply for a card with a welcome bonus that wasn’t intended for you
  • Cancel or downgrade a card within 12 months of acquiring it
  • Cancel or return purchases you made to meet the minimum spend

The first and third restrictions aren’t too surprising, while the second one is a bit more problematic, if interpreted literally. Many cards come with the first year’s annual fee waived, and one of the reasons the card issuers do that is to give people a chance to try a card before they “buy it.” So if a card really isn’t working for you, I don’t think there’s anything wrong with canceling the card after around a year.

While the language is intentionally quite extreme, I don’t think that’s how they’ll enforce it in practice. My guess is that they’ve added this language for people who are signing up for offers they’re not targeted for, repeatedly canceling cards a month after receiving them, etc.

Amex has actually been known to take away points and close accounts for people abusing the system, so really they’re just putting this discretion in writing.

For now I’ll mark this as “developing.” We’ll have to wait and see if this language is added to other cards, and also whether Amex actually changes anything as a result of these new rules. In other words, will they shut down the account of someone who signed up for a publicly available offer, put spend on the card, kept it for 11 months, and then decides the card isn’t for them? I doubt it.

What do you make of Amex’s new language regarding welcome bonuses?

Comments

  1. HA. The first point is totally on AMEX not the consumer. Consumers can apply for whatever they want-AMEX needs systems to prevent handing out bonuses not in align with their rules.

    The 2nd and 3rd I agree with.

    The 2nd does possibly impact people who apply for an annual fee card where the fee is waived the 1st year though with the intention of closing the account prior to having to pay the fee. Card issuers could just not waive any fees for the 1st year.

  2. What does this mean?

    “Apply for a card with a welcome bonus that wasn’t intended for you”

    I see that Ben has addressed this in the first comment, however, if someone applies for a card with a welcome bonus that wasn’t intended for them, shouldn’t Amex. already know the person isn’t eligible and simply offer the card and not the bonus points?

    Like if someone had an Amex. platinum card and got a 100,000 bonus points on it. Two years later, they cancel it. A year after that, they apply during a 100,000 point bonus promo. Wouldn’t they just give the person the card (assuming they passed muster in the credit check) and not give them the bonus, like, automatically? I don’t understand how #1 can really be “abused.”

  3. The second one seems strong. I imagine/hope this is only geared towards serial churners, but with the once-in-a-lifetime bonus policy, there can’t be too many of them with AMEX anymore.

  4. Yes, TravelinWilly , makes a good point.
    There are valid reasons that have nothing to do with points as to why a person would cancel a card and then reapply.

    Had the card, couldn’t afford the fee, or maybe their business went out of business, and then when they could afford it again or started their business again they reapplied.

    I feel AMEX will take that into account and is probably trying to only go after quick churners, but the language being so brief does make it possible innocents will be caught in the process.

  5. Amex has always been stellar with me, both from a customer service aspect, as well as with the MR program.

    I was late with a payment once (the only time that’s ever happened with any card I’ve held), and forfeited like 1,800 points because of that. I called them and they reminded me that that is the deal. However, they kindly re-instated those points and waived the re-instate fee, due to my credit/purchase/payment history with them.

    The most worrisome verbiage is this:

    “We may also cancel this Card account and other Card accounts you may have with us”

    I’m not a churner by any means. I’ve been an Amex member in good standing since 1990, with my original account still intact (now as an PRG card). I also hold a newly issued Amex personal Plat, as well as an Amex Gold Delta – and this is about to hit the first renewal date.

    Yes, I got it for (and made the spend quota to earn) the 50K Delta sign-up bonus pts. Yes, the first-year fees were waived, and yes, I utilised the $50 Delta statement credit (bought a Delta gift card). I was very likely to have cancelled it prior to the renewal fee, as it turns out I’m not doing much business with Delta after all. That is, until I read this post.

    Do the new terms apply to existing accounts? Or only to newly-issued accounts? Is it worth it to cancel my Delta gold, thus putting not only my 27yr sterling track record with Amex at risk, but my 200K MR points as well?

    Hmmmmmm…..

  6. Ben (the author of the blog), it’s not extreme, it’s straightforward language. It’s targeting people who play the signup game to accumulate points, it probably won’t affect ordinary users who simply want to accrue points and miles for things they would spend on anyway.
    This was in my terms for my new Amex Gold business card and I am perfectly fine with that, I can transfer points to Emirates, I spend a lot on computer hardware, software, and services anyway, so I may as well get points for it.

    @mojo, I would call up and explain to American Express, simply tell them the Delta gold is not a good fit for you, and ask if you cancel will it affect you.

  7. Ben,
    Unfortunately amex has already been enforcing these rules without publishing them. I can speak from experience. In April 2016 I applied for a public 100,000 point bonus offer on the amex platinum. I completed the minimum spend and received the bonus. Then I refocused my spend on my usual rotation of credit cards that offer better bonus catergories(one being the amex everyday preferred).
    After about 4 months of not using the platinum I decided to call and cancel it. I talked to a amex rep and she assured me because I had the everyday card that I would not lose my points, nor would canceling my platinum card matter so I canceled.
    About a month later I randomly checked my point balance and noticed the 100,000 bonus was gone. I immediately called amex, filed a complaint and explained what the agent said and even offered to reopen the platinum card if they would reinstate the points. I was told a claim would be filed and I would hear from amex soon. After a few weeks of no correspondence I called back and was told I would receive a final decision in the mail. After a few months of waiting I called again and was told that they would not reinstate my points with very little explanation other then they reserve the right at anytime to confiscate points.
    As much as I wanted to cancel all of my amex cards after this terrible customer service I didn’t. The everyday preferred offers too
    Good a value. I’m glad amex at least has published these rules now so it’s clear to the agents, and this hopefully doesn’t happen to anyone else.

  8. I think it is interesting that Amex has had a fair number of targeted offers, challenges, and gifts for high spending customers, not to mention the Centurion card itself, and I feel this is in line with that. Amex has stated as much that they care less about raw market share than they do about acquiring individuals who are high spenders. As someone whose spend is almost always on an Amex card I can’t quibble with the perks going to those who actually spend the bulk if not all of their money with one card issuer.

  9. I’m disappointed that you didn’t hat tip the probable source: a Reddit user. Now other blogs are crediting you with the discovery. While the possibility exists that you arrived at the information independently, I think the timing is suspect. If you did, my apologies.

  10. Doesn’t the middle restriction (forfeiture of bonus points if cancelled or downgraded within 12 months) have the most obvious loophole? Even if AMEX strictly applied across the board, just wait until you’re in your 13th month (after the annual fee hits) and then cancel the card then. You’ll be past 12 months and as long as you cancel within the first month of the new annual fee year, you’ll get the fee refunded.

    Let me know if I’m missing something here….

  11. Amex is going downhill fast and I would not be surprised to see them out of business within the next 10 years. Costco was just the start. They are losing prestige.

  12. Sean S. (July 26, 2017 at 5:02 pm) is spot on with his assessment. If you have the spend throughput, AMEX is pretty amazing.

  13. To Paul’s comment:

    I think of OMAAT and TPG and their kind as digests of FlyerTalk, Reddit, and other travel related newsfeeds – most of their “news” is culled from other places. I skim the headlines here mostly because they spend a lot more time picking through all the other sources than I have time for… And man the churning forum on Reddit is like drinking from a firehose!

  14. @Chris The new AMEX policy that went into effect last September is that you have at most 30 days after the AF is due to cancel and get a refund. So yeah, your point is valid, you can pay the fee when it comes due, wait just past the 12 month point post application, and then cancel and get a refund.

    Besides, I can’t see how AMEX is going to get away with telling people they have to renew every AMEX card the second year, whether they want to keep it open or not. I’m guessing some Federal departments might want to talk to them about it if they really try to enforce that.

    But of course since I don’t know that for sure I’m hoping this policy is not retroactive. I just canceled an AMEX Delta card a few days ago because the AF is due in a few weeks, which puts me just under 12 months. And I must admit I put very little spend on it past what the bonus required. I’ll probably be okay anyway, since I have a 20 year history with AMEX, and I’m using my Surpass and Everyday Preferred regularly. But if their intent was to make churners nervous it’s certainly having that affect on me. 🙁

    I imagine what they are really wanting to stop is people who use targeted offers that don’t belong to them, sometimes altering the urls to make it look like they qualify. Not to mention the folks who sign up for card after card, get the bonus, then immediately cancel. And they probably didn’t really mean 12 months, but rather cancelling way before the first year is up. But still…..

  15. @Paul

    I frankly don’t care about “citing sources”. It just doesn’t matter to me. As brian kusler mentions, my perception is that the news is culled from other places. Gary and Ben contribute enough of their own personal knowledge and experience to their blogs, that stories about fine print changes don’t matter terribly. I’m also pretty sure that Gary has some sort of browser plugins set up so that he is notified when page content changes… particularly loyalty program T&C changes.

    I’d care more if someone’s true IP is being exploited without their permission, but stories about simple facts don’t raise my ire. Copy and paste someone’s analysis on what various programs’ loyalty points are worth, and don’t credit them? That’s a different story.

  16. Yeah, AmEx is laying down the law. But one of the reasons people churn cards is that the banks incentivize it. If you don’t want me to close the card after the first year, make it worth my while to keep it open. I mentioned on Gary’s blog that it’s a much tougher sell for me to pay a $450 fee with a $300 travel credit than it is for me to pay a $150 fee and no credit.

  17. Once I calmed down a bit, it occurred to me to check the application date for my recently canceled Delta card, and most of what I just posted doesn’t really apply. I was approved on June 30, 2016, and my AF wasn’t due until August 5 this year. So no problem with the ‘keep it open 12 months policy’ after all. At least as long as they keep having the second AF be due 13 months after the card was first issued. At any rate, I cancelled over 3 weeks past 12 months point so I’m in the clear. Which I’m sure you are all happy to hear. 😉

  18. For items one and three I agree those are fine because people do that are clearly gaming the system. I don’t really see the reason for option 2. I mean if someone is cancelling to avoid an AF on a card that does not waive it in the first year I can see that, but lets say someone closes the card after 10 months? Amex wants to go after those points? What does that do? Their offers are once in a lifetime so its not like people can keep churning the same card over and over.

  19. There are many reasons a person will cancel after a year besides “gaming the system.” AMEX has every right not to extend credit in the first place and every right to insist on adherence to terms and conditions. I think they will get in trouble with regulators if they try to take back points from people that follow the rules as published, just because they turn out not to be profitable customers. Maybe thry’re a churner. Maybe they’re someone whose needs and circumstances changed or will change.

    In any case I would think there’s seldom a reason why you’d need to cancel before 12 months. I called to cancel a Platinum card after about 11 ½ months and the agent suggested holding onto it until the 13 month threshhold to take advantage of two more Uber credits. He told me exactly what day to call again and cancel.

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