Many reports have surfaced lately that American Express is doing another clawback round for Visa/Mastercard gift card purchases. This can include things like Giftcards.com purchases, purchases in the $504-$506 range and the like. Some of the earnings clawed back were regular earnings, some were the bonus referral offer earnings tied to spend, and some were signup bonus spend. Feel free to share your experiences in the comments below.
Hat tip r/churning, MPD, MEAB
Related: Is it Safe to Manufacture-Spend to meet the Signup Bonus Spend Requirement?
Is there any way to know what points they clawed back, or even just how many?
I got the email, but it references a sock drawer card. Looking at my points activity online does not show any Zero’d or negative transactions.
I have bought GC with Amex gold, so am not too keen on the idea of calling up to have even more eyes on my accounts
Got a 2nd clawback on a different Gold card. So $500 not a good amount at least for MR cards.
Yep, Amex does not like VGC purchases for SUB and MS in general. Over 10 years ago Amex shut down all my cards with them after scaling VGC purchases at CVS. An Amex rep called me and told me to stop purchasing VGCs which I promptly did; Amex closed all my cards anyway. About 5-6 years later I was off the Amex blacklist and I opened a new card account.
Which Amex card earned bonus rewards at CVS? How did you know you were off their blacklist?
I kept applying once every year after a few years and finally was approved.
could’ve been Old Blue Cash
Yep OBC and I think the Surpass also had a drugstore bonus category way back when.
Clawbacks are like a shot across the bow with a clear warning from Amex. The next level are card account closures.
Amex has really gotten to be one of the worst issuers. Clawing back from people who closed their accounts already is such a mess, these people if they moved or did anything that doesn’t let them keep track of a few bucks like this would be dinged on their credit score.
As far as I know, Amex does not report clawbacks to the credit agencies. They do keep it in their records though and it is better to play fair ball with Amex in the long run.
Just got a clawback randomly on some Dell Credit for $93.15 Is this company crazy? I can’t even remember if I kept the Dell item or not and now i have to go call them to complain and they’re adjusting for some amex offers probably to get this random umber. And their cards are all so idiotic now “spend $10 each month on wireless!”
What does a clawback LOOK like in the rewards activity tracker? Just an overall reduction of points? a single line item adjustment? Old purchase histories now worth zero??
There is no line item entry from what I am hearing. You should get an email saying there was a claw back but I am hearing scattered reports of this not happening. That email won’t tell you what was clawed back and likely the card listed in the email wasn’t the one impacted. The only way to know what amount was clawed back is to either watch your balance carefully and/or ask a competent CSR.
… can they clawback/bill you for points already redeemed one way or another?
Yes, certainly they can.
Are people getting their SUBs clawed back as well? I just got a new Hilton card from the summer promotion site and forgot that I can’t use Plastiq to make the MSR. Dunno what I’ll do if I can’t buy gift cards either.
Prepay your taxes?
Not heard of co-brands being hit so far. It is just MR cards at this point. A couple of years ago it was the co-brands that got hit and MR cards were not impacted.
The Hilton 12x clawback wasn’t a clawback. They just never gave people the points. It’s pretty tough to get your points taken back once they’re in an account controlled by another entity
Eh I don’t know what you saw but I saw points post as 3x (as unbounsed spend) and then a second line item taking them back from my Hilton account. Bonvoy was similar. The points most certainly made it to Hilton and Bonvoy and then were pulled back almost simultaneously. Also don’t fool yourself there are instances of banks though not Amex as far as I know pulling back points some time later. Suntrust pulled back seven figures of Delta points on some users many months after posting them for spend on the old Delta debit card they had.
I am running about 5 or 6 days late on my sub for business plat. Anyone else?
why is it such a big deal when customers use their credit cards to buy gift cards or cash equivalents?
issuers (ie big banks) pretend customers are hurting their bottom line….. PLEASE
i could understand if a customer was getting cash advances at a casino, but purchasing a gift card to generate spending and earn points/bonuses, who cares? issuers should be happy people are using their credit cards in the first place!!
That’s mainly because they do not want to run afoul of IRS rules. IRS treats the rewards you have earned as rebates on your purchases, thus reducing an item’s cost basis. Cash equivalents, on the other hand, have a fixed value, and their cost basis cannot be reduced. For that reason, issuers must not give you rewards for these types of purchases since they cannot be considered rebates.
Interestingly, there was a case a few years back when the IRS visited this issue involving Amex, and it was determined that VISA gift cards are not necessarily considered cash equivalents because there are services associated with that card, and that card itself cannot be redeemed for cash (you will see that all of these cards specifically mentions that you are not able to redeem the card for cash at an ATM or get cash back from a grocery store, etc.) In the very same case, however, they did determine that money orders directly purchased with their cards (as well as the reloading of the debit cards with a credit card) indeed did not qualify as rebates and that taxes would have been owed for the “income” that the person has received as part of those purchases.
Regular gift cards should not fall under the same rules though since they are not really in this gray area as far as being “cash equivalent”. That said, they also probably want to offset some of their costs in providing these promotions, most likely because the promotions themselves would exceed what the merchant is paying for their swipe fee, and they would rather want organic spend on the cards for what they are paying to encourage card use.
There is also an element of risk for money laundering when cash equivalents are purchased (e.g. purchasing massive amounts of money orders with your credit card). That would most likely attract the attention of regulators and place issuers in the spotlight that their payment instrument is used to facilitate money laundering activities. That’s probably why you also see these clauses with cards outside of Amex because issuers want to control the level of risk they are undertaking by allowing these types of purchases on their cards.
Your first comment was spot on and hopefully clarified this issue for a lot of people. But this one (although also true) is what gets people so upset. The “money laundering” argument is such a stretch when you’re talking about a perfectly traceable transaction (money order bought with debit gift card, which in turn was bought with credit card – no cash or crypto was used along the way). Not to mention, the aim of money laundering is to clean huge sums of money. Average joe on here probably does a few thousand a year, maybe 5 figures, doubt anyone is doing 6 figures anymore. Some limit on how much in GCs you buy is reasonable, banning them completely is really not.
I believe what you are describing here is considered to be the placement phase in the money laundering cycle — considering that the “debit gift card” isn’t your traditional debit card that is linked to any particular individual (i.e. not issued by a bank with a linked checking account that can be tied to an owner), but instead, a card that can be used by anyone without any kind of registration and can be given away to another person. This is why many money services businesses (MSB) or even the card issuers themselves are starting to tighten down on rules as far as how money orders can be purchased (e.g. purchases requiring a debit card with a regular bank with your own name printed on the card). Also, money orders that are now purchased through these “anonymized” funds can now be deposited into a different account, which is a classical example of what money laundering is.
Because of the anonymized nature of these cards, some issuers are also not very forgiving when you try to pay their credit cards with these funds. Citi, for example, will happily shut all your cards down if you pay with multiple debit cards over a specific span of time, regardless of the amount you actually pay with them (e.g. paying your CC using multiple Topcashback rebate cards). Similarly, when a bill-pay check is received from an MSB entity (like Walmart Money Center), similar concerns are raised about the source of those funds.
The amount itself isn’t really that significant anymore, especially when it comes to an MSB. This is because the suspicious activity report (SAR) reporting level for these businesses is only $2,000 ($5,000 for banks). So technically, if you visit the Walmart Moneycenter to buy money orders every day, and you get someone who finds you suspicious, they can file a SAR on you with just that threshold alone.
Not saying that buying money orders should be prohibited per se, but they often become a compliance issue when it comes to complying with KYC (know your customer) and AML (anti-money-laundering laws). Many banks or issuers in this case would elect to get rid of their customer(s) rather than having them be a compliance issue.
Worth noting in your ML example, that in the case of everyone doing this in the points and miles game, they DO have the trail of transaction numbers and CC numbers on receipts that prove very easily it’s not ML. Yes, a debit gift card can be used to break the cycle as you say because it CAN be purchased with cash or someone else’s credit card, however that is not what anyone is doing when playing the points/miles generation game.
Right, but most issuers will not care because if you are a compliance risk you most likely will be shut down, whether or not there was malicious intent.
For Citi shutdown, how many debit cards in what period of time?
It’s not a definite variable, but it’s played into their risk equation. The more you do, among other things, the more likely it is it will get you shut down.
so if we’re buying amazon or disney gift cards, we shouldn’t expect points to be “clawed back”? Only transactions with Visa/MC gift cards are at risk?
Usually, any bonus offer or category spend would have exclusionary language for gift cards, as follows: “Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include: fees or interest charges; purchases of travelers checks; purchases or reloading of prepaid cards; purchases of gift cards; person-to-person payments; or purchases of other cash equivalents.” That being said, it seems like they have focused primarily on prepaid gift cards thus far.
Let’s be honest. We know what we’re doing and we know what the risks are.
Exactly. I don’t understand why we gotta be butthurt over it.
Is anyone still funding bank accounts like USBank 3k with Amex for MSR after this? Not sure I should anymore.
can you explain how to do it? does it work with chase cards?