Posted by Chuck on July 23, 2019
Credit Cards

Published on July 23rd, 2019 | by Chuck

121

American Express Terms Consider Gift Cards Ineligible From Earning Points

We’ve known for quite some time not to  meet an Amex minimum spend requirement by purchasing gift cards. Beyond the minimum spend, many people have no issues getting points on gift card purchases, though there are select merchants like Simon Mall gift cards which apparently don’t earn points.

At some point, Amex added in the terms on all cards (sample link) to clearly disallow signup bonuses from being earned with gift card purchases.

To qualify for the $250 statement credit, you must make purchases with your Blue Cash Preferred® Card from American Express that total $1,000 or more within your first 3 months of Card Membership…Purchases to meet the spend requirement do NOT include fees or interest charges, balance transfers, cash advances, purchases of traveler’s checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of any cash equivalents. Additional Card Members on your account are not eligible for this offer. To receive the $250 statement credit, your Card account must not be past due or cancelled at the time the statement credit is posted to your Card account.

On various Amex cards, the gift card exclusion shows even for earning ordinary points. It’s not showing on all cards explicitly for ordinary points, but does on some; here are a couple of examples: Blue Business Plus card (link), Gold card (link) Blue Cash Everyday (link). All cards show the gift card exclusion for the bonuses, and many cards show it for ordinary purchases as well.

With your Blue Business® Plus Card from American Express, you earn one Membership Rewards® point for each dollar you spend on your Card for eligible purchases. For the first $50,000 in eligible purchases in each calendar year you also earn one additional point (for a total of 2 points)…Eligible purchases do NOT include fees or interest charges, balance transfers, purchases of travelers checks, purchases or reloading of prepaid cards, purchases of gift cards; person-to-person payments or purchases of other cash equivalents. Additional terms and restrictions apply.

Last we wrote about this was in March 2018 when Amex excluded reloadable prepaid cards and Amex gift cards from earning ordinary points. The pages quoted there still show the same terms with only Amex gift cards being excluded, but on the above-mentioned ‘important information’ pages, many cards show the exclusion for earning points on any sort of gift card, not limited to Amex gift cards.

In all likelihood, places like grocery stores will continue to earn points (unless you get manual reviewed in which case all bets are off), and specific locations like Simon Mall gift cards will continue to be excluded from earning points and rewards. But it’s worth knowing that the terms technically disallow all gift cards from earning points.

The terms would imply that even third party gift cards, such as Amazon gift cards, won’t earn points. Again, I have no doubt that regular, small gift card purchases from Amazon or most retailers will continue to earn points as before. On Prime Day, I bought a few small gift cards on Amazon, and it’s showing as pending rewards in my Membership Rewards account. Larger amounts or easily-detectible amounts, such as $500, do have some risk of Amex not awarding points if they decide to crack down on this, or they can potentially claw back points.

Hat tip to reader R.O.

[Post has been updated to reflect that these terms may have already been around on some cards for a while.]



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HJ
HJ

I know that you shouldn’t buy a ton of vgcs on to meet the msr, but would it be ok if you already have (or will) meet the msr via organic spending? Want to buy one vgc using the staples amex offer but not too sure 🙁

George
George

My wife bought Happy GCs when they had the Amex Offer, then took a break right at the MSR mark, and the SUB was issued.

She still met the MSR organically (I think she was over by $1-2k) by the end of the period. Easy to do on the Gold, though, as it has a low MSR and killer earnings.

Never bought VGCs, but if you reach the MSR organically and get manually reviewed, I’d say you only risk losing the points on those, not the SUB.

HJ
HJ

Thanks for the DP, yeah I’m actually working on the Gold as well 🙂

Mimi
Mimi

After seeing all the recent clawbacks AXP has done, one can NEVER be too sure that they won’t suffer clawback sooner or later. Since you have posted this on a public forum and RATs are reading this, it makes it easier for them to know what to look for assuming they’re not working on it already.

George
George

The question was regarding a VGC purchase during the MSR timeframe causing problems if the MSR is met organically anyway. I provided a DP showing that a small merchant GC purchase during the MSR timeframe did not prevent the SUB from being issued, and that when the purchase was combined with an organically-met MSR, no audit was triggered and the SUB was not clawed back. Basically, “if you play by the rules, there’s no risk of a clawback (duh), and if you don’t look suspicious, you probably won’t risk an audit.” I did NOT suggest any of the following:
– VGCs = merchant GCs
– high-value GCs = low-value GCs
– meeting the MSR solely with GCs of any type
– meeting the MSR with a combination of GCs and organic spending, and then stopping
– buying a lot of GCs to earn points (whether base, bonus, or SUB)

So I’m not suggesting one do anything to skirt the rules. You seem to be pissed that my DP shows what doesn’t put eyes on your account, and that similar activity will begin to do so once the RAT team reads it. If you’re not skirting the rules yourself, what do you have to be worried about? 🤔

HJ
HJ

I agree with George, I was asking whether a gift card purchase would prevent me from getting SUB even if I finished the MSR via organic spend 🙂

Kevin
Kevin

If we’re talking about an average consumer buying a couple small GCs every so often, I don’t think it will be an issue. Large volume or large amount is going to get you looked at more closely and not given the points.

rick b
rick b

Average consumers don’t have BBP, and few have Gold cards or even want to pay any kind of annual fee. Also GC are often a very big legitimate marketing cost at many businesses.

I fail to see how buying GC in a non-bonus category is any different to them than normal spending of the same amount.

Kcihtred2
Kcihtred2

Another day another thing for the rat team to sniff out

captainsave
captainsave

Rat team working hard this summer.

Mimi
Mimi

no doubt about that!

Chaser123
Chaser123

I used Bus Blue at office supply store today for their GC promo. I will report back.

Mimi
Mimi

that’ll be interesting to monitor since OSS report L3 and shows exactly what we buy. Hopefully, we’ll see lots of DPs if they even get the base pts for buying V/MC GCs from OSS; it’s well documented online purchases from GCM, GCC and SMall have not earned even base pts.

Mike
Mike

When did Amex stop giving base points on GCM/GCC purchases? As of early January, Bus Blue was still earning 2X at GCM (haven’t tried since). I heard about Simon not earning but hadn’t heard that about GCM/GCC.

Mimi
Mimi

Great job RATs, you’re on a roll. You deserve a promotion, if not great perks and additional benefits from the company you work for.

sa13doc
sa13doc

does any one get recent transactions coded as follows using Amex?

Recent transactions is coded as –

STAPLES
View Details on Merchant Website

Additional Information:
$200 MASTERCARD
VENDOR FUNDED COUPON
Reference:

Parts Unknown

This is L3 data. Everything you buy at staples is detailed to Amex

Noah
Noah

Is there a list of L3 reporting merchants and L3 receiving issuers?

Mimi
Mimi

This is how L3 data looks like and it’s the same for the other OSS and grocery stores that submit L3. Even if buyers try to vary the amounts, all their purchases will be shown in detail.

az
az

Only Staples provides the L3 data to AMEX. I didn’t see any other merchant provides such data.

alex Liang
alex Liang

While I gues amex more using the amout you purchase to monitor whether there is a gift card transaction I guess like xx5.95

Hg
Hg

No. Staples or other merchants have amex the information. For example I bought the $200 mcadtercard staples promo, and Amex is showing MasterCard gift card 200+6.95 MANUFACTURE COUPON final charge 200. The information is very detailed.

HChris
HChris

Bought a $200 MGC for $206.95 last week at Staples. Shows $200 MGC on charge but so far points are pending. Will be interested to see if they claw back, although I could potentially argue that they did not implement the no-gc clause into the MR earnings at the time of purchase. However, that would probably put a target on my back.

Dick Bupkiss
Dick Bupkiss

You can “argue” anything you want, and it’ll be meaningless. They make the rules, they do what they want, regardless of what anyone might “argue.” Cross your fingers and hope for the best.

Mimi
Mimi

True; the RATs have proven to everyone what they’re capable of doing and we can’t deny they’ve been doing their job well.

Those who are caught “abusing” a loophole had their rewards clawed back and have no other recourse to fight for it.

Mimi
Mimi

If you’re one of those who like living on the edge with a target on your back, go for it. After all, the higher the risk, the greater the dividends.

missjenniferd1🦉 🦁

Mimi i think you have a referral code that im interested in (i dont want to post my email here publicly so, rather you contact me on reddit. thanks.) here’s my reddit profile https://www.reddit.com/user/missjenniferd1

anonymous
anonymous

I imagine Amex has algorithms that are slightly more sophisticated than “does it end in 5.95?”. 😉

Nick
Nick

I still don’t get the angle as to why they care people do this. Don’t they get the same interchange fees if I buy a $25 amazon gift card or $25 of food at grocery? Only thing I can think of is that Fraud or default rates must be a lot higher in situations where gift cards are purchased

YoniPDX
YoniPDX

Yeah, it seems pretty stupid like they are becoming anti-MS in general.

It’s even more idiotic considering Amex earns most of their income from interchange fees and not CC interest

aubergine
aubergine

The might have ton a customer segmentation profitability analysis, and determined that folks who buy large amounts of GC, aren’t really profitable for them, redeeming for high value rewards, not paying AFs, asking for retention, using every perk under the sun etc.

A long time ago I worked for a firm that did that analysis on a 30mm customer. (different biz line, not cards) and determined the customer cost us 35mm to service. Net negative. So our bosses fired the custy.

RAT is basically doing some variant of that.

Howard
Howard

People have gotten delusional with MS. There is no way businesses like Staples and OD are paying AMEX 5% fee. AMEX loses money on those CB. What they hope for is you would only carry that one card and put all spending on it. Obviously that’s not how MS people do things. I don’t know why people are surprised that AMEX are trying to get rid of unprofitable clients.

Richard
Richard

True. I was sitting in main cabin extra on an AA flight. Some old lady behind me said she spends enough on her AA card every year to go on 2 free round trip! I rolled my eyes

frogger
frogger

Why would you role your eyes? You should be kneeling down and kissing her feet. It is people like her that are supporting our free travel.

YoniPDX
YoniPDX

That makes a ton of sense, considering that Amex earns the smallest amount interest income of all the cc issuers (of which we credit card sharks pay little if any at all to Issuers). As well as we also have the smallest breakage % for MR and other miles/Points.

aubergine

frogger
frogger

Also Amex charges higher intercharge fees than other issuers. And they do this as they have affluent customer base so they these people are very profitable to stores. If you have a large base of people who are poor and are unprofitable for businesses they won’t be able to charge such high fees.

CC_guy
CC_guy

Just an FYI, they definitely don’t get the same interchange on a random $25 spend at any given retailer, big ones especially which have negotiated different discounts with major payment networks. Banks will tend to lose money on higher rewards cards (e.g. Citi double cash) from purchases at major big box retailers.

Joe
Joe

Because people aren’t buying gift cards for 1% rewards. People buy them for 5%+ rewards. The intent of the program was never to pay 5% out on most purchases. The intent is to entice you with a few categories so that you carry it and use it more.

It’s like you’re starting to see with cards offering more rewards for “Streaming services”. People lose their mind over the 5% number, but who really spends that much on streaming services to make it worthwhile?

frogger
frogger

People get 4x MR from spend at grocery stores. That isn’t profitable to Amex. Why do you think it would be? Most people are probably not spending much more than a $1000 a month on groceries. They get money from people spending on the card on non-category spend. If all MS do is spend a ton of money on Gift Cards at Grocery stores on the Gold card and than cash out at Schwab Amex is losing a ton of money.

MSer
MSer

Hardly – with Schwab fee at $550 and Gold at $250, very few of those people are unprofitable customers for Amex.

rick b
rick b

Maybe fraud is an issue, but default rates don’t matter. You have to make minimum payments to get your points. I can’t imagine that there are THAT many people buy GC and dumping the card balance unpaid.

George
George

For each card, Amex expects to pay $X for the points (base + bonused), Amex Offers, various spending offers, card benefits, etc. Those numbers are decided on based on average/historical spending trends. They also expect to make $Y amount on AFs, interchange fees, and interest. That means they expect $Y-$X on that card.

When you exceed the trend by 100, 500, or 1000%, you’re eating into their profits because it’s more than they expected to give you in points.

Add to that the increased savviness of cardmembers on average (e.g. people redeeming MR for things that cost Amex more, limiting expenses to bonused categories, etc.) causing a general upward trend in $X, and they’re feeling the squeeze. So they target those at the “top end” of the #-of-people vs. $X/person curve, as lowering outlay across the board (by slashing benefits or lowering earn rates) would make their cards unattractive and thus reduce the number of cardmembers. They stand to lose less from fewer signups by people that were considering a moderate amount of GC spending than they lose from keeping people with massive amounts of bonused GC spending.

SamL
SamL

What about WMGCs at WMNM? (These can be used at WMSS and SC.)

Trevor
Trevor

IDK but LMK the DP ASAP, TY.

Richard G
Richard G

I would be curious to know about this as well (IWBCTKATAW) 😉

SamL
SamL

oh-aitch kay-ay-wye ay-wye doubleyoo-wye-ee

Xandy
Xandy

What are these acronyms? Would somebody please add them to the knowledge base (https://www.doctorofcredit.com/knowledge-base/credit-finance-acronyms/)?

Richard G
Richard G

“walmart giftcard” “walmart neighborhood market” walmart supercenter” “sams club”

Xandy
Xandy

Thanks.

dan
dan

did a split pymt of $40 @ staples for the amex offer with the BBP; got an email for a $10 cr, but will see whether any MR pts will post

simbroseph
simbroseph

I did the full amount on my card and credit never posted.. Guess the split payment helps?

George
George

Maybe not… they usually get L3 data from Staples. My purchases did code fine, even for the +1X offer, but that doesn’t mean those won’t get clawed back.

I think the credit is safe, as the offer terms don’t say anything about GCs.

HChris
HChris

Bought multiple VGC at two different grocery stores yesterday with the Gold for <$300. Will report back on data. However, purchase was mixed together with organic spending bc I trust the Amex RAT to be very good and have been trying to fly under the radar for a while. So no obvious $xx5.95 charges for me.

Drivesabrowntruck
Drivesabrowntruck

If Amex wants people to shift their gift card buying to other cards, I’ll be more than happy to accommodate them. I’ll also be more than happy to cancel all AF cards such as the Schwab and Gold cards. The BRG is already DOA when my AF comes up now.

frogger
frogger

I don’t think they are going to miss you. Oh no we are losing that guy who manufacture spends on his Gold card for 4x MR and redeems at 1.25 CPP via his Schwab card.

rick b
rick b

The big question is, after the dust settles and they’ve kicked out every reward maximizer and MSer, how many true customers do they have left? These days, most people are smart about rewards, even if they don’t MS. The glory days of 80s and 90s are gone when Amex was only premium game in town. Maybe they’ll be back with looser rules.

frogger
frogger

The profitable ones. Amex makes a ton of profit. I bought their stock in February of 2016 and so far I am up 132% not even including the quarterly dividends.

Remember that Senator that was on trial in New Jersey he got someone to pay for his hotel in Paris with MR points and then he used his own MR points to buy an expensive grill. I doubt too many real customers are maximizing their rewards. Most gift cards aren’t even 1 CPP. Delta value is probably what most people use travel transfers for. Not much value there.

rick b
rick b

Please don’t get too delusional about stock performance as somehow proving their tactics are right. Thanks to the corporate tax welfare, just about every stock is up due to them buying back their own shares to massively inflate the market well past even unreasonable P/E ratios. Eventually it’ll come crashing down.

Yes there are dumb people who use these cards, but I’d say it’s fair to say that many more people are now wiser to the game thanks to guys like TPG going mainstream. Even if they cut out MSers, they’ll still have to deal with reward maximizers which is a much larger percentage of customers. Some older people may be clueless but new generation is taking their place.

Maybe Amex should worry about making their MR program actually useful beyond a few very niche redemptions and I’ll be more inclined to put organic spend on the cards.

Kevin
Kevin

I think more consumers are maximizing rewards in the sense of juggling cards than did like 5 years ago, but still a minority. As stated, TPG and the like are more mainstream now so more people are probably interested than used to be.

But when it comes to redemption, yeah, I think most people don’t care and just redeem for whatever because it’s a free reward.

raj
raj

.. most of them? We are a small community of loop-hole abusers, massively unprofitable customers. They DON’T WANT OUR PATRONAGE, and the only reason we get away with it is because businesses are huge bureaucracys that move very slowly.

Mimi
Mimi

With $550 AF on the Schwab CC, I understand why people will maximize their benefits but I agree with you that for those who MS this card heavily just for that benefit may not be missed by the company.

TPG explained how to use the benefit for those interested in it: https://thepointsguy.com/guide/cash-out-points-amex-platinum-for-schwab/

Blue
Blue

It will be interesting to see when they roll out a T&C change to existing cards.

Tectomoc
Tectomoc

I checked the “Benefits” tab of my Blue Business Plus and Gold cards and they have the new language in the section that describes terms for earning points. Ominous!

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