Posted by William Charles on April 10, 2019
Credit Cards

Published on April 10th, 2019 | by William Charles

201

American Express RAT Cracking Down On Closures Within 12 Months

The American Express Rewards Abuse Team (RAT) seems to be cracking down on people who have closed credit or charge cards within 12 months of them being opened. The terms on American Express cards state (emphasis ours):

If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome 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 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 <the bonus> to your account.

Previously American Express has really only clawed back the bonus if people cancelled within the first few months, usually people that do that are doing so to get the annual fee refunded as well. But we received a report from a reader who had the bonus clawed back because they closed the account after holding it for 11 months, before the second annual fee post.

Contents

Data points

What This Means

Keep in mind American Express will refund the annual fee completely if you cancel the card within 30 days after the statement in which the annual fee hits. So your best bet would be to cancel within this period, after your one year anniversary is up.

Final Thoughts

I think what some time happens with American Express is that if you do something they don’t like, they will go through all of your accounts and bonuses to try and find a reason to deny you the sign up bonus, or claw back a bonus that has already posted. It’s not clear if this type of claw back will automatically occur if you close within 12 months, or if this is more of a targeted clawback due to other issues. This isn’t necessarily new, but it seems they are being more strict on the shut downs. We’ve posted about this issue previously here. Please share any recent data points you have in the comments below.



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Chirovegan
Chirovegan

What if you have already used the welcome offer bonus after month 1, how will they claw it back after month 12 if you’ve already used it?

Davy
Davy

I say you just dare them to take them back. We’ll see how that ends for you.

Chirovegan
Chirovegan

So you wait a year to use your MR?

Davy
Davy

No. You just wait until your annual fee posts to cancel the card. That’s a pretty simple rule to remember. I have yet to see a credit card that doesn’t send you a nice reminder of when your annual fee posts… it’s right there conveniently on the bill!
Cancelling sooner on an annual fee card from any vendor is just inviting trouble down the road.

Ethan
Ethan

You will be billed the equivalent amount of money.

Staradmiral
Staradmiral

they can bill you for it at 1cent per point. And if you refuse to pay they send it to collections and get it slapped on your credit report. I would not mess with them.

El Guapo
El Guapo

I don’t think so. Membership Rewards points have no cash value, technically, so they can only post a negative MR balance on your record. They did this to me when I closed a card under 12 months after already spending the points. I talked to several people there and was told that it would just stay on my record and would be deducted from any future MR balance I might accrue.

If you have any evidence to support your statement, please share.

John
John

My friend’s 50,000 MR were clawed back. Since he had transferred most of them to a partner he had a negative MR balance.

Patrick
Patrick

>Membership Rewards points have no cash value, technically

They’re taxed as 1cpp

Even if they can’t won’t bill you for the negative balance, you’d more than likely get the popup on future applications in a scenario like this.

El Guapo
El Guapo

Since when are Membership Rewards points taxed? Credit card bonuses are benefits, not income like bank bonuses.

grejotyx
grejotyx

The signup bonus points aren’t, sure. But this year Amex sent 1099s for MR points people got in other ways e.g. credit card referrals: https://www.doctorofcredit.com/american-express-sends-out-1099s-for-referral-bonuses-hilton-1-25-cpp-everything-else-1-cpp/

kevin
kevin

second this. i experienced the same thing when i closed an ed card when signing up for spg lux. ed had only been open ~7 months but needed the slot for the 3 day window when spg lux launched. agent didn’t mention anything on the call but got hit w/ mr clawback for the ed bonus a month or so later

frogger
frogger

They will be SOL. But if you cancel after 1 month you are just asking to get the pop-ups to say you aren’t getting a bonus if you sign up for a card.

scott
scott

Most of us are getting those pop-ups now anyway. My wife and I never cancelled until at least a year, usually longer, and we both get those pop-ups.

Jim W.
Jim W.

“Most of us” isn’t just you and your wife. Be very careful with this kind of language unless you have real data pointing to percentages for the entire population.

JackRyan
JackRyan

I got that pop-up as well attempting to apply for a Gold Delta SkyMiles card around a week or so ago. First time I’d ever seen it. I have largely given up on AMEX after they instituted the lifetime ban. I loved the Starwood points back in the day. It wouldn’t be too hard as a programmer to figure out which queries to run to get a list of churners. Shaking off the is_churner = TRUE flag would probably take a lot of effort for me at this point, and for a couple of lifetime limited bonuses, it just isn’t worth the spend / reforms required to look like a “normal customer” to their algorithms. The game may yet change down the road to where I’d consider them again, but I’m happy camping elsewhere for the time being.

Frogger
Frogger

I got the pop up one day and the next day it was gone.

Bobby
Bobby

Same here, always waited a year, and keep some for longer. Also no manufactured spend, only about 4 cards per year, but still get the not eligible popups from AmEx even when applying for cards I haven’t had from AmEx before.

Wb
Wb

Reward balance will go negative and you’ll be flagged and will not be eligible for future sign up bonuses.

Lantean
Lantean

This client hating credit card issuer needs to get sued…

Thomas
Thomas

Abuse needs to stop. I totally support Amex (and others) for cracking down on blatant abuse like this.

The card issuer does not hate clients. The card issuer merely tries to protect their business from vultures.

frogger
frogger

I think you are on the wrong site to be posting nonsense like that.

Morgon
Morgon

Not necessarily. There’s a huge difference between taking advantage of an issuer’s offerings, and maliciously exploiting them. Keeping a card for the 12 months is very clearly defined in their Terms, I’m not sure what the issue is; we get to play when we play within the rules.

Churning can absolutely be done in ‘chaotic good’ (or ‘lawful evil’, depending on your POV) mode, and it’s the single thing that keeps the hobby worthwhile.

Sarah D
Sarah D

Rules lawyering to stay off their radar doesn’t separate you from the vultures. Not that what we are doing is wrong, but it sure isn’t right either, issuers are totally justified in kicking people to the curb for being exploiters

sam
sam

It seems like Amex is charging an undisclosed annual fee…I totally get going after people with the balls to get a bonus and first fee refund through closing the card in a month or 2 etc….I don’t get going after the people who close at 11 months, 11.5 etc…to of course, prevent the first “thereafter” fee from being charged. That screams customer abuse to me. There is a point of “reasonable” on both sides…. Amex should watch it and make sure they don’t try to pin that second fee on people and not refund it without making it crystal clear in their terms they, in effect can’t get out of the fee….

Morgon
Morgon

“Second fee”? What on earth are you on about? The ANNUAL (key word) Fee is posted pretty clearly at signup, and the TOS is readily available. Everyone knows exactly what they’re getting into.

But even their AF refund policy, while fairly common knowledge, is plainly stated in their terms:
“Closing your Account: […] If an Annual Membership fee applies, we will refund this fee if you notify us that you are voluntarily closing your Account within 30 days of the Closing Date of the billing statement on which that fee appears. For cancellations after this 30 day period, the Annual Membership fee is non-refundable.”

If Amex were acting in bad faith, that’d be one thing, but combined with the clearly-stated rules that not having the card for 12 months can forfeit your bonus, I’m not entirely sure what more you want from a company whose (reasonable) goal is to attract and reward new members to their platform.

sam
sam

It appears they are “acting in bad faith” more and more each month. Supposedly people are being told they can’t cancel within the 30 day period for a full refund prior to the 2nd year, month 2 starting, which is NOT stated in the terms of the card, and Amex’s language being used in their terms is troubling. To me, they are showing every intent to push and push the bounds of what they consider to be abuse- including taking advantage of their advertised offers, trying their product, and consumers not acting as Amex would prefer late into each first cardmember year- and like others have said, no I don’t think its reasonable to view closing 1 month shy of 12 as abuse because Amex is sad about missing out on the 1st (or 2nd) annual fee. Having to wait for the fee to post- under these circumstances makes me a bit uneasy at how successful I will be in getting a refund in waiting for it to post. What then….stops Amex from posting the fee after the 1st year, refusing the refund it, and clawing back points when they cry ABUSE!!?

Morgon
Morgon

They literally tell you they’ll refund an AF if canceled within 30 days of it generating. Whether you think it’s “reasonable” is irrelevant. It’s in the Terms you agreed to when you signed up.

Neither this post, or any of the discussion here, mention anything about Amex “refusing” to cancel a card; are you just making up random hypotheticals?

Anyone who can document that they contacted Amex to cancel a financial product and were “refused” would have some pretty strong grounds to get the feds involved. I’m not saying an agent has never done something that stupid, but I’ve never seen anyone claim this.

sam
sam

Lol yes, in the contract they will claim you BROKE and therefore no longer applies. That’s notwithstanding the potential for having to ask for card closure every one of those 30 days and having reps either not do it, or the “system” not do it properly. ooops

Morgon
Morgon

“The potential”. So do you have datapoints or personal experience of this happening or not? Being outraged over “potentials” sounds pretty exhausting.

sam
sam

Obviously not and if you had read, I never said that I did. To date, I’ve actually personally (nor P2) had a single issue with Amex, yet I wholly believe I will sometime in the next 2 years, and it won’t be from some “abusive” behavior on my end. It is not some “fantasy” prediction. Look at the direction Amex has been heading with CUSTOMER abuse. They are doubling down on it.

Morgon
Morgon

I don’t feel abused by them. All of their stipulations have been clear, both within their terms and throughout the community. Rules + Good bonuses or Free-for-all + paltry SUBs – choose one.

Eric
Eric

If you are correct, why did 9 people Vote Up Thomas’ comment (I wasn’t 1 of them).

Frogger
Frogger

People are stupid. Why read posts on a blog that is made to get as many miles and points as possible if that is your attitude?

Morgon
Morgon

People are stupid because they understand the difference between playing outside undefined boundaries and running full-speed into a clearly-defined wall?

I’m sure there are quite a few legitimate gripes against Amex, or any card carrier – but this specific issue isn’t one of them.

el_pistolero
el_pistolero

Can we ban this POS?

BUT_WHY_MALE_M0DELS
BUT_WHY_MALE_M0DELS

i don’t know why you’d advocate for this. Tommy boy is right. it’s in the terms you agree to and it doesn’t cost anything to keep an account open for a year.

Davy
Davy

I assume you were looking in the mirror when you said that?

Eric
Eric

You are calling Thomas a POS? I think you are the person that should be banned.

Flea
Flea

Especially since Thomas’s upvotes now number 40, lol.

PoorChurner
PoorChurner

I think Thomas gets an award for the highest amount of up votes on DOC.

Charlie
Charlie

The upvotes are now at 59.

MickeyMouse
MickeyMouse

Here’s my experience:

Open Hilton Biz Card July 2018
Met SUB August 2018
Kept Card Open

Open Hilton Personal Card Jan 2019
Met SUB Jan 2019

Open 2nd Hilton Personal Card Jan 2019
Met Sub Jan 2019

In February 2019 was contacted for a “financial review” and all accounts were frozen. I offered to submit paystubs and proof of income but did not authorize them to fully view my taxes with the IRS as it’s not something I feel comfortable with. They did not allow me to send the paystubs or a substitute proof of income. Subsequently all 3 accounts were closed.

Now I did not contact them or ask them to close the accounts they did that of their own accord.

As of today the points are still mine and I don’t believe they should go anywhere. I’ve never had an issue like this, we do have a legitimate Business as well so I’m not sure why this happened. Thoughts?

YoniPDX
YoniPDX

JMHO I do see three things FWIW.
All the cards we Hilton only, it looks like you meet “SUB” in short time period.

I’m guessing that you might be new to AMEX. I’m also guessing that you didn’t or don’t put much other organic spend on the card(s).

As well I’m not sure what other card accounts showed up on you you personal CR they do soft pulls.

I’m just speculating here.

AFIK they can’t claw back non-MR points.

@MickeyMouse

MickeyMouse
MickeyMouse

The Hilton Biz Card I did put a good amount of organic spend on and used frequently. When they froze it it had a $1,600 balance on it. I immediately went online and paid it in full in case there were concerns that it would not be paid since it was an income related inquiry.

All the limits they gave me were very low.

Between the 3 cards they only gave me $9,000.

Also at this time my FICO was about 720…

As far as the personal cards I met SUB quickly because they were low SUB amounts. ($1,000 and $3,000) which isn’t hard to meet for me.

V
V

@MickeyMouse#746791
If your income was legit and you did have paystubs then I don’t understand why you were uncomfortable authorizing Amex to verify your tax returns. They do have your SSN anyway, and it’s a credible lending institution, not a random person, what sensitive stuff is there in a tax return that a lender should not be allowed to see?

Burton
Burton

I would take the opposite approach – what are they looking for that couldn’t be verified by my paystub/w2?

V
V

Anyone can make up a pay stub but if a bank reaches out to IRS they will surely get the actual figures as filed.

Alys Holden
Alys Holden

Can banks do that? Do banks actually do that?

V
V

If you’re asking whether Banks can reach out to IRS, yes, Banks can ask you to sign an IRS form that authorizes the bank to receive your tax info. That’s what MickeyMouse mentioned above that he refused to give that authorization and preferred to lose the credit card(s).

MickeyMouse
MickeyMouse

I just don’t feel comfortable giving them that level of access to a Creditor.

If I was applying for a mortgage I completely understand because it’s hundreds of thousands on the line….while this was for a whole whopping $9,000.

The only time I’ve ever heard of this information being requested was when people requested a CL in excess of 25k on one card.

V
V

You already mentioned you’re not comfortable but I don’t understand why, you haven’t given a reason. The only reason I would refuse it would be if I didn’t have the income I was claiming. I can’t think of a second reason.

JMR0303
JMR0303

Here’s a reason- because I don’t want one more possible avenue of exposure. When even a credit bureau can end up breached and expose people’s data to the world, I want my tax info in as few hands as possible.

Snorlax
Snorlax

Yep, and its mandatory to fill out that form if a bank is issuing you a mortgage.

HaveMiles
HaveMiles

@MickeyMouse could have told Amex that he can’t release the tax returns because they are currently under audit 🙂

Jokes aside, I probably would rather not do business with Amex than having them go through my tax returns. Happy to provide other info.

V
V

Lol.. only super rich can get away with sh*t like that, or open nepotism, or refuse to pay wages to their workers and blackmail them because of their legla status, or running an unsecured email server from their basement with classified info on it. A lowly navy officer like us took some photos on a ship that was not allowed, he literally used the “Clinton Defense” that it was a mistake but it was denied, ordinary Joe’s must be punished.

V
V

That makes sense, the exact amount of “last year’s tax due” is one question it’s asks to verify your identity.

Charlie
Charlie

The moral of this story is sad but simple. If you have a legitimate business, and you need business credit products, you should pick a lender for your business and then strive to keep that relationship squeaky clean. Do churning and MS elsewhere.

Alan Apar
Alan Apar

Oh please, what childish whining. You aren’t entitled to get incentives they design to develop long-term profitable relationships and have no business complaining when they crack down on those taking advantage of it.

Snorlax
Snorlax

Sued for what!?

Rich
Rich

Scum bag bankers who took our bailouts freely. Amex is a dying brand. Lost Costco, merchants hate them, chase and citi leveraging their banking side to target high end clients. Amex card used to mean status. Now it means Jack.

Sevillada
Sevillada

We need rat poison

Frank
Frank

The only Amex card that my wife and I each have had is the old no AF Hilton card, which we still have open. However, we’ve each have had several Chase cards.

Amex has denied each of us new cards in the last year due to too many account closures.

Can’t have anything nice anymore.

Frank
Frank

Stop being me

Frank
Frank

I’m just being frank lol

LC
LC

that actually makes no sense. sorry they hate you. funny thing is if anyone was going to get banned it should be me… ive had 95% amex cards and never hold it longer than a year.

Frank
Frank

Lol no kidding. I don’t get it, but whatever.

Jim W.
Jim W.

If these facts are real, you can be assured that that’s not the real reason they denied you

MIL215
MIL215

I had a woman really hound me about my cancellation asking me why I cancelled and calling me out when I said other cards had better earning, how I used it only for rewards, etc. My spend was about $5k and I maxed out all freebies.

Oh well. Gonna need to churn and burn a few more and move on to other stuff.

frogger
frogger

Just say you use one of your other Amex cards more now as it has such great features. That is what I do and that seems to make them happy.

LC
LC

or literally hang up and call again. they wont have access to your info when you hang up.

Debit
Debit

What happens if you close the card before 12 months to get annual fee refunded but didn’t get the sign on bonus since you had that card before.

What do they clawback.

Mike L
Mike L

Your first born child.

lorem ipsum
lorem ipsum

If this were true, I might be looking for ways to invite a clawback. 🙂

frogger
frogger

Nope. But no more sign-up bonuses for you.

Chuck

Debit There’s no issue with cancelling if you didn’t get a bonus

Dom
Dom

Any idea what happens if you spend the points and then close, does it go negative?

mm
mm

yes

Ann
Ann

Probably they treat it like an outstanding balance, expect you to pay it back under threat of credit report dings, even though the card is closed to any further charges.

Darv
Darv

Almost certainly not. I exhaustively researched this and could not find a single datapoint of anyone being billed for a negative MR balance.

Ann
Ann

Okay. Not a risk I’d want to deal with personally (I see no reason they couldn’t decide to start doing that even if they haven’t yet), but have at it. ¯\_(ツ)_/¯

(edit: got “Davy” and “Darv” mixed up)

El Guapo
El Guapo

Darv is right. According to my conversations with Amex after going negative on a MR balance, it will affect my ability to get future bonuses and will be deducted from any MR I collect on other cards, but that’s it. Since I’m not an Amex fan anyway, I can live with that.

dood
dood

stop repeating this sillyness.

Ann
Ann

New DP just posted this afternoon on http://www.fragiledeal.com/t/beware-amex-benefit-clawbacks-on-closed-accounts/3317 – not MR points, but a Saks credit benefit that got clawed back on a closed Amex account caused this guy to get hit with a late payment on his credit report.

Davy
Davy

Yes. Lots of data points of this over the past years on reddit.

Matt P
Matt P

Probably nothing, but there are so many MR cards to go through, why would you risk it?

myi

Rat season on its way, the weather gets warm, the RATS come out!
Again as the famous saying goes, PGFHGS…

V
V

myi,

CYPETAFM?

In other words, could you please explain that acronym to me?

Mimi
Mimi

V

PGFHGS means pigs get far, hogs get slaughtered ~ common saying among manufactured spenders.

myi

Pigs get fat hogs….

V
V

Thanks, it’s new to me. I guess that means those who are relentless and reckless get far but those who are careful get slaughtered?

Mimi
Mimi

It used to be that pigs just get fattened when they don’t go overboard crazy MSing but the last two years, pigs have been shutdown with the hogs eversince companies hired rodents to go after “abusers”.

UA

The complaints against the Terms and Conditions are are ridiculous.

The product is offered subject to the rules presented by the issuer – just follow them! The only exception to that process that makes any sense at all that comes to mind is cancellation not being met with appropriate warnings by American Express CSRs, but even that is a courtesy.

Darv
Darv

Actually it’s a contract which has two sides. If one side provides consideration, the other side is obliged. So if I open an account and the terms are that I spend a certain amount of money within a certain timeframe and I do it, Amex has received due consideration. They are then obligated to pay the bonus. They put things in their T&C to suggest they can arbitrarily deny bonuses for “abuse” but at the end of the day it’s a contract like any other. If Amex were to deny me the bonus in this situation I would pursue all available options. I’ve seen a couple people on Reddit take Amex to mediation.

Charlie
Charlie

It would appear that the terms are that you spend a certain amount of money within a certain timeframe AND that you keep the card open for 12 months.

Aleks
Aleks

Totally agree with you. Users – please read full terms before blaming the company. If not agreed with TLC – simply don’t use that product/service, so need to complain later, if the company enforces the terms both parties agreed upon.
Anyway, there are no many advantages of cancelling the card within 1 year. Sign up for e-bill and can cancel after your card anniversary.

Darv
Darv

Just so I’m clear, expressed restrictions they have in their T&C are fine and reasonable such as cannot close account within 12 months, cannot have previously had this product. But they can’t say that if they determine that I have abused them by opening too many new accounts, they can’t deny me the bonus. They would need to put any such restriction into the terms such as how many accounts I’m allowed, if I’ve met that max. All of that needs to be agreed on when the contract is made, which is when they make the offer, I accept by applying, and they accept by approving the application/account. I think they tried to do this with the “pop-up” window and that is fine, because they are expressly saying I’m not eligible for the bonus. But if they do not tell me at the time of application that I’m not eligible, then I am eligible, and they will be obligated if I do the spend as agreed.

So yes, I will blame Amex if they don’t pay out the bonus as agreed and I will hold them accountable.

UA

I agree with you, and I’ve written about this sort of behaviour on my blog on a number of occasions – customers shouldn’t be penalised for a company’s mistakes.

Arbitrarily deciding that a condition attached to offering the product will no longer be met in absence of a violation of clearly stated rules isn’t acceptable.

Jim
Jim

What about the the 150K Hilton points bonus from aspire ? I was gonna cancel this before 2nd fee hits but I just upgraded to this card 3 weeks ago.

Staradmiral
Staradmiral

just cancel after the 2nd fee hits and the fee gets refunded

sam
sam

within 30 days you get full refund right? what about the 150k points you earned for spending $4k then? will they be able to claw it back from my Hilton account? Sounds bad if they can take the points back from hilton account

frogger
frogger

I think if you upgraded and you cancel after 3 weeks you are going to be on the do not give bonus points to this person list.

gary
gary

a couple of complaints to CFPB may stop this if complaints come in saying that refused to pay annual fee and old points removed. would be a good class action as well.

UA

Why? The terms and conditions are clear on this.

Frogger
Frogger

Terms and conditions aren’t always enforceable.

PoorChurner
PoorChurner

What’s hard about leaving a card open for a year other than the length of time? I opened the Green card just for the 25k but when the AF shows up after 12 months I’ll cancel.

frogger
frogger

For charge cards no big deal. But if you have 5 Amex Credit cards open you can’t get anymore until you cancel one that you have.

FLY
FLY

so plan better.

Frogger
Frogger

I am planning better. I am planning free vacations for 2020. Already have all my 2019 vacations booked.

JoeW
JoeW

One reason i can think of is that churner doesn’t have 12 months to spare, maybe because that person scare he/she will pass away before the AF hit and leave the family the debt of AF without them knowing. Next time you know the debt collector come to knock on the door and things spiral downward from there….

Maybe that’s why? /s

Charlie
Charlie

So a person can now know the day they are going to die?

Frank
Frank

The problem with this is normal people would cancel their card BEFORE the annual fee hits (they don’t know it gets refunded) and then get punished with a clawback. Experienced CC collectors know that’s not how it works but this seems like it could really hit your average “eh this card cost too much” person

frogger
frogger

Who cares about those people?

JB
JB

I do, since I used to be one of those people.

Charlie
Charlie

So was I.

dave
dave

Normal people would pay the annual fee. Or not get the card in the first place.

Sarah D
Sarah D

The idea to “open a card for the sign on bonus and close it” is obvious. Every non-churner I know who had cards like amex plat/CSR had the intention to cancel before the 2nd AF posted (about half seem to forget though). So that is absolutely normal, but also the kind of behavior amex is trying to crack down on

Eric
Eric

That’s their fault for not reading the terms.

Chuck

@frank the issue is only if you cancel it early enough to get a prorate, I’d think if you cancel after 11.5 months (which I believe won’t get any prorate), you’ll be fine.

Frank
Frank

The Data Points section says 11 months got clawed back. If I hadn’t know better I’d definitely have cancelled at 11-11.5 months out of fear I’d forget

Frito Pendejo
Frito Pendejo

I already got every MR card and schwabbed out. I can even spend my orphaned ~300MR remaining for $1 at Amazon. Thanks!

LNK
LNK

That always offer without lifetime message… close my gold card 2 years ago, got a new gold card this year with 50K MR.. so think again whether you really have every MR …

slanky
slanky

rats get fat while good men die

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