There are multiple datapoints coming out of American Express shutting down credit card accounts, it seems those affected are having all of their cards closed (sources: /r/churning, reader e-mails, @milesperday and MtM). Those with accounts shut down report receiving an automated e-mail message informing them of the shut down. The common thread seems to be cardholders that have used their cards to make a large volume of payments using PayPal Key, the shut down risk might also have been increased if this was paired with the 3x referral bonus.
In the past American Express has shut down accounts for ‘abusing’ no lifetime language links and other reasons.
Folks hearing that taxes and mortgage are ok. But gathering it in one post, has anyone heard payments of mortgage, taxes or other legit expenses triggering shut down with PPK? And I mean legit mortgage payment, not home lines or something where you repay and reborrow, but periodic payments that are obviously legit.
yooooo
How does PayPal Key even make money though?
If you link a credit card (say Amex) to PayPal key, you pay with a mastercard, so the merchant and their bank pay the Mastercard interchange rates. But then paypal key charges your Amex and so PayPal ends up paying Amex interchange rates.
Unless I’m missing something, fees are paid twice. Someone is losing money here.
Consider the entire business model not just the expense of a single transaction. And also not everyone who uses PPK funds it with credit card. This is simply the cost of “customer acquisition” for Paypal. Paypal wants more users, can mine transaction data, and will make other companies pay to advertise to paypal users. Look at all the in app avertisements, Acorns, Paypal Credit, credit cards, Digital Gift cards (merchants are giving commision), and so on.
Very simple model actually, like a youtube page. Amass a large number of “followers” and then play gatekeeper with ad placement and data selling.
This guy churns.
Yup PayPal loses money. Now you know why they banned Plastiq.
Paypal is losing gobs on this. They’ll plug the hole. Any day now. For all merchants.
Interchange fees
when you get shut down do you forfeit all the points that you have at that moment?
AMEX: yes
Chase: you have 30 days to use
Thank you!!
Depends on the reason your account was shut down.
Can someone enlighten as to who is losing the credit card interchange fees on this situation? I’m guessing it’s either Paypal or Mastercard. It’s not the merchant. If a charge comes through for Chase or Amex and it’s a credit card I assume they’ll bill Mastercard for the interchange fees as credit cards. I would think either Paypal or Mastercard is getting shorted here and I don’t know why Chase or Amex or whatever bank would care about these charges, unless it’s unallowed payments like paying debt. If we put in the card info how is that our fault what fees are charged? I highly doubt Amex is shutting down people unless it’s a blatantly unallowable charge.
Payment networks like Mastercard generally collect a small fee, somewhere like 0.1% for their services, the bulk of the interchange money is between the acquiring bank to issuing bank. Probably on the PayPal side, they’re covering the extra amount.
Its PayPal
Amex is pissed mostly because some idiots used PPK+PQ to pay other CC bills or the bill for the same card. Thats just a big no-no
Spent over $30K paying ahead mortgage, auto loan, insurance, tuition via PPK from Gold as source card with +3 referral bonus. OK so far.
AmEx statement shows the name of each merchant as “PAYPAL *PQ (merchant name)” so I figured I’d pay only absolutely legit-sounding businesses, e.g., not my contractor who does business in just his own name.
It was pushing the limit, I know, as AmEx doesn’t allow some of these categories via Plastiq. But I did it as a crude test, because if this sort of legitimate spend to maximize their offers is going to get me shut down, I’d rather find out now than later. Collecting no-stress easy-to-use Hyatt points with Chase cards while getting paid to meditate would be better for my mental health.
Don’t be shocked when 12 months later the fat paw of the RAT claws it back. Then again, you don’t seem to be as greedy as some of the pigs I’m hearing about.
Why would they claw it back? My guess is Amex is getting paid credit card interchange fees by Mastercard. These shutdowns are probably compliance issues like paying debt or risk flags if spend spikes. I think it’s Mastercard or Paypal that’s eating the fee losses. I don’t know why the charges would post as purchases to the banks if they weren’t getting paid regular fees. The glitch is probably between Mastercard and Paypal.
Edit: actually what I said doesn’t make sense. It wouldn’t be Mastercard paying Amex the fees it would be Paypal.
AMEX was getting paid in all these cases of abuse, even with people they shut down. AMEX gets paid even if you buy GC to meet MSR for bonuses. They claw back out of principle, when they feel like you’re gaming it too much.
For now, seems they limited the worst shutdowns to the most obvious abuses. But no one will be surprised if after further review, they’ll claw back / shut down even more accounts
I should have clarified. I’m aware of Amex’s history. But yes, I will be very surprised if Amex shuts down those of us who are making tax payments. And I don’t think these shutdowns were related to gaming. It sounds like people were shut down because they paid Amex credit card balances? Something like that? That sounds a lot more like a compliance issue or risk management than does cracking down on rewards abuse.
Does making Tax payments using card calls for shutdown ? What is about safe amount to make payment using card ?
I can’t imagine why Amex has any problem with people paying their taxes with a credit card. I’ve never heard of a card issuer having a problem with that.
Question is if Amex is ok with you using PPK to pay for taxes (benefit is it codes as debit so you are getting charged a flat fee).
It codes as a debit for MasterCard. Paypal codes as a credit card for Amex. Paypal is paying Amex fees for credit card purchases through PPK. You’re paying taxes with an Amex card. There is no controversy here. If you’re looking for controversy I guess find the private channel where they’re talking about the ridiculously stupid things people did to get banned. Paying taxes isn’t it.
Similar to why Amex doesn’t like people buying VGCs and similar, even though they’re getting interchange fees. Specifically on the mortgage listed, you can pull money out of that – money that you could use to pay off the credit card that is paying the loan. Amex really, really hates this kind of closed loop because in theory you could rack up thousands (or millions) in charges without really buying anything. Especially combined with the +3x referral, they’re almost certainly losing money on that.
So I could absolutely see them claw that back after further investigation. They apparently caught a bunch of obvious ones in this first wave, the only question is whether they’ll continue to investigate.
I respect your perspective but it’s speculation. I’ve followed this for years. People MS tens of thousands on Amex cards every month and very few get shut down. I still don’t think this shutdown wave has anything to do with rewards abuse. When I think Amex clawbacks it’s clawbacks for ineligible purchases resulting in signup bonuses. That’s bigger fish–60,000 points at a crack. Or return purchases like airline tickets/credits. Even shutting people down for buying gift cards, when it does happen, is probably not about rewards abuse but rather risk management or compliance in combatting perceived money laundering. Maybe these same people work on the RAT but when people say RAT here or elsewhere they usually mean rewards abuse, not security. Again, from what I’ve seen which is limited, people have been shut down for somehow paying off Amex cards or along this line, not even for making mortgage payments through Plastiq. Even if people were allowed to make mortgage payments on Plastiq that would be a dispute with Plastiq and they’ve had those disputes in the past and never taken action against cardholders.
This seems overblown. Implementation of this PPK is obviously haphazard but not surprising given Paypal’s track record. Paypal is probably the party eating the fees here. I don’t see what the fuss is about.
Very good to know. I’ve been hitting the tax payments hard. Will probably prepay property taxes too.
Hi is using PPK as debit to pay taxes a high risk to meet MSR? Also can Pay1040’s fees be included for MSR? Thanks!
No. Paypal is paying Amex full freight in interchange fees and the expense itself has always been allowable for signup bonuses. I have paid taxes to meet minimum spend on several Amex bonuses and not only that, had to manually intervene in two cases because bonuses didn’t post (relatively widespread issues involving Hilton and Delta cards). Both times Amex awarded the points after manual intervention. You don’t have anything to worry about.
Thanks for the DP. To confirm you used PPK on these Amex cards to pay for your taxes?
did a PPK mortgage plastiq payment for 2 houses in October. had referral bonus extra 3x points. Got all my points….glad they banned plastiq before did something stupid…but I also put all my spend on there.
Is it possible to sue Amex?
See your credit card agreement.
Seems like Amex intentionally sets “traps” such as the platinum 10x grocery bonus and other supposedly uncapped ways to earn bonus points to lure MSers and then will do the shutdown just a day or two before the statement date! It is in their interest to collect as much of the processing fees as possible and then later deny the points or cb.
Happened with me years ago when there was the Amex blue cash card with unlimited 5% cb on grocery spend and for a month where I had about 3k in pending cash back had the card shutdown just a day before the statement and cash would post. I lost about $800 in gift card and money order fees that month based on buying $60k worth of the visa cards at 5.95 per card for all $500 denomination cards.
So a two way street, if there is people trying to game with AMEX, AMEX is also trying to game with people.
Spending $60k/month at the grocery store isn’t a good idea.
My point was how Amex may intentionally allow such loopholes just to trap people knowing they can earn extra processing fees and then deny points/cash back!
“haha I’m just a really hungry guy haha!”
Lol claims he was “trapped”, MS $60k/month
If you’re involved in this hobby, you know how Amex RAT is & you know these games shouldn’t be played with them. I can’t muster much sympathy. Save the trial & error for Chase.
Haha Chase I’m on their blacklist too, from about 2013 to 2017 I was maximizing 5 different ink cards to spend at Staples giving 5 ultimate rewards points per dollar for visa gift cards for $50k per card annually and earning about 1.25 million ultimate rewards points per year. Their RAT too caught on and even now wont approve me for any card.
Was a good run while it lasted redeemed for plenty of business/first class flights and luxury hotel stays as a Hyatt diamond during that period!
Everyone was shut down on the same day in those uncapped 5x OBC days. You were not anything special and they didn’t intentionally wait until last day. Btw, the capped OBC has worked fine for past 5 years
The reddit thread thinks it’s people who were paying Amex bills using PPK through Plastiq. How is that even possible? Plastiq doesn’t allow payments to credit cards?
hehehe….
Plastiq read PPK as a debit card. So, people were setting their PPK funding source as a CC and essentially sending payments through from the CC. I thought it was asking for trouble so I didn’t do it. You have to be a special kind of stupid to play these games with Amex.
Come on now folks. This is amateur hour.