Posted by William Charles on May 11, 2019
Credit Cards

Published on May 11th, 2019 | by William Charles

76

Chase Sends Out Letter About Misuse Of Rewards Program – Will Close Accounts If It Continues (Referral Related)

Update: I should have made this clearer, but this letter was sent out to people who were using methods to bypass the 5 card referral cap to earn additional points. Not just people who were hitting the 5 referral cap and others kept using their links.

Chase has sent out letters to some cardholders stating that they have been misusing the rewards program and if it continues all Chase credit card accounts would be closed. It seems that people are receiving this letter because they have gone over the maximum number of referrals you’re allowed to receive on a single card (5 in this case). There are a number of ways to go over this maximum, but I won’t go into detail here as you can see this is a bad idea and can lead to account shut down. The letter in question can be found here.

Hat tip to Andysol1983

 



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Brett
Brett

I wish I could get referrals but my friends are too broke..lol

whodidntante
whodidntante

I think these referrals were to “friends” not friends. LOL

Brett
Brett

Same thing

James
James

I wish I could get referrals but I have no friends.

Snorlax
Snorlax

This turned dark quick

John
John

🤣

Harry Nguyen
Harry Nguyen

I would say 1 referral is enough, eventually they might even close accounts for AU. Who knows.

Matthew Ivan
Matthew Ivan

These people obviously spread their links via google/facebook ads. Chase doesn’t approve. Inviting 5 or 6 people isn’t going to attract attention

George
George

I don’t think any of the “perpetual referral offer” issuers (Chase, Amex, etc.) care that you’re posting referrals publicly. They do care when you figure out a way to get referral bonuses once you’ve reached your limit, though.

What’s supposed to happen is, referrals past the limit don’t earn bonuses. That means your 6th referral will track, you just won’t get the bonus. They’re perfectly happy opening a 6th card through a referral and NOT giving out the bonus.

What’s happening is, people have figured out a way to get bonuses on further referrals through some clever method. That’s gaming the system.

robertw
robertw

To me this is strange since the perople still have to approved for the card. Isnt that the intention? The bloggers are paid much more than these referral bonuses so I wonder why they would not even pay more than the 5 referrals anyway? Maybe I am missing something here.

missjenniferd1
missjenniferd1

robertw
you’ve made a great point, i agree!!!

i dont agree with that some people exploit the system because that will piss off any company. so they shouldnt have done that.

BUT, you’ve made an excellent point, in that, why the 5 limit to begin with, why wouldnt chase want as many people to sign up?? the more the better for chase… who can find reasoning with these companies?!!??

and if a blogger (or anyone else) got 100 people to sign up, it doesnt seem fair that they should be only limited to get bonuses for only 5 referrals, it should be the total amount of referrals.

but i still agree that their system shouldnt have been exploited, and those that were doing it, certainly knew there would be fallout if they got caught….

COBOLCODERUSEALLCAPS
COBOLCODERUSEALLCAPS

It’s probably related to the 1099-MISC tax reporting for revenue over $600. That’s why Amex limits their bonuses to 55,000 MR.

VL
VL

In most of the cases it is true.. but 5 referrals 20K UR each, does not fall into this category. I can only think that 5 came from the other cards/referrals where the bonuses are 10K points, and somehow it is a hardcoded value now.

George
George

The bloggers are in a contract that stipulates how to refer people. You must say certain things, you can’t say others, you have to watch for deadlines (e.g. expiry dates on increased bonuses), etc. They’re also vetted to make sure they’re not teaching people how to profit at the bank’s expense. With consumer referrals, they have no control over the way you go about it. Why do you think bloggers, rather than /r/churning mods, are the ones posting paid referral links?

Snorlax
Snorlax

Yes, bloggers have special business arrangements with card issuers, it’s as simple as that. Joe Random Cardholder plays by different rules.

John
John

Interesting… makes sense though. Why would you give a friend your referral link if you’re already at 5 referrals? Seems like they are looking for cases where people posted their link online and have no control over how many people use it.

I would be scared if I posted my referral link online and received this letter. There is no stopping someone from using your link if they have it already.

Wyle
Wyle

You missed the point. It’s not that there is a 6th, 7th referral, it’s that people are actively doing “something” to trick the Chase system into awarding bonus points for those referrals.

drew
drew

so i referred myself to get my second CIP. i assume thats what this is talking about yes? guess i wont do that anymore..havent gotten letter yet so hopefulyl not on their naughty list..

wiivile
wiivile

what? how is referring too many people abuse?

and they can’t shut down the URs earned thru referrals because they HAVE PAID TAXES ON THEM

is this about self referrals? that is the only way this would even be even remotely reasonable.

Alan Apar
Alan Apar

So, how is that Chase’s problem?

Ian
Ian

how is what chase’s problem? if they take URs which somebody has paid taxes on, it is theft.

Alan Apar
Alan Apar

No it isn’t. Tax implications aren’t Chase’s issue, that is between you and the IRS. Chase retains the right to close accounts and terminate UR at any point for virtually any reason they deem misuse – it’s just part of the deal you signed up for.

wiivile
wiivile

it’s theft because chase took a tax deduction on those URs by issuing 1099-MISC, so for them to snatch them back… it’s not just theft,
it might also be tax fraud? by issuing a 1099-MISC for the UR, they are conceding the URs are your property

Alan Apar
Alan Apar

Huh? There is no relationship between Chase sending out 1099-MISC and corporate tax deductions – and even if there was that would be between them and the IRS, again not anything like ‘theft’.

I obviously can’t get their tax return, but from a Financial Accounting perspective they treat rewards obligations as a liability against card income (which means they don’t treat it as a cash payment) – if the obligations decrease because they clawback points the liability decreases and resulting income would show an increase.

wiivile
wiivile

they consider it a business expense, treating us as employees for referring them business. if they claw back referrals for which UR were issued, they’re cheating not only us, but the IRS also

Alan Apar
Alan Apar

No, they don’t – I edited my reply above to include how they treat it (at least for Financial Accounting). They certainly aren’t treating you like an employee or contractor at all. Just because you receive a 1099-Misc it doesn’t mean you were a contractor of whomever issued it.

Frank Rizzo
Frank Rizzo

I agree with this completely. However, if they were to take them back in the same year in which they were received, it would be a different story since you haven’t received the 1099 yet.

Ann
Ann

Yeah, the decent way of handling this would be if any 1099able rewards that haven’t been clawed back by the time they generate the 1099-MISCs for the year, in the following January, would be ‘locked in’ as safe from clawback.

Alan Apar
Alan Apar

Or the decent way would be not to try to find ways around their terms of service and accepting it when they shut you down for it…

The absurd sense of entitlement some of these game players have is ridiculous – really, why is your tax situation Chase’s problem?

Frank Rizzo
Frank Rizzo

Damn dude… Do you work for Chase? Or maybe your dad’s the CEO or something. I really don’t know why you would get so but hurt over what other people do. And WTF is someone like you doing on DOC anyway? If you’re such a stand up guy, you wouldn’t be on this site to begin with.

Alan Apar
Alan Apar

Man you are whiny. I ain’t ‘butthurt’ (nor am I crude 8 year old who needs to resort to such crap to express myself). You think the only people on this site are whiny little babies who think that chasing nickels makes them savvy and then cry when their little games don’t work out – if you can’t do the time don’t do the freaking crime.

Like I said, the absurd sense of entitlement is ridiculous – if you had to pay taxes on income that then gets clawed back cause you didn’t earn suck it up and move on. Really, grow up.

Frank Rizzo
Frank Rizzo

There are only three types of people who would look at a site like DOC.

1) people who are looking for good deals and various travel hacks.

2) people who work for the banks and are trying to find out the ways we exploit them so they can put an end to it.

3) trolls. These are usually the people who go against the grain just to provoke a response.

So why don’t you tell us all what your reason for being here is.

Alan Apar
Alan Apar

My reason is #1. Good deals doesn’t haven’t to include fraudulently tricking IT systems and then whining when the fraud is discovered and the fraudulently earned bonus rescinded… And those who do whine when the ways they are ‘exploiting’ others are terminated are really pathetic losers.

G
G

e.g. via google/facebook ads, which is excluded and treated as abuse by many referral programs

Burton
Burton

Late to this post but I don’t see how tax implications would prevent them from clawing back a bonus. They can amend a 1099, just like you can amend your 1040, if the amount is not correct. Their deduction can be either corrected or trued up the following year.

Alan Apar
Alan Apar

They wouldn’t amend the 1099 and you wouldn’t file an amended 1040 because the income from the prior year would still be correct. You may be able to take a deduction in the year the income was rescinded using a section 1341 credit (but I think it would have to be higher than $3000).

Adam Kahn
Adam Kahn

@Charles: Even if someone refers 50 people, the referral bonus is capped to 5 approvals annually. So how is this costing Chase anything? Are some people able to circumvent the 5 max referrals limit?

Dan
Dan

If this Chase idiocy continues I will be moving on to other banks lol

M
M

ROFL

Frank

They welcome your choice

Frank

I think a lot of comments don’t understand what DOC is saying. This isn’t about too many people using your referral — it’s about breaking chase’s system to give you credit for more than 5 referrals (which is the cap). Posting your link online isn’t going to screw you — chase will just stop giving points after 5 referrals

J
J

Just to clarify, this is about people primarily doing one of two tricks (one in particular seems to be the main culprit) in order to generate referrals for multiple cards from one, and get multiple referrals from just one card.

If you have a CSP, CIP, CF and max out the referrals for each of those, that’s not the problem.

Sam
Sam

so is it this one? I dont really get the point of secrecy, especially since it is now important to know which method is the one triggering the letters
https://www.reddit.com/r/churning/comments/blaqfs/discussion_thread_may_06_2019/emn6j53/

J
J

Yeah Sam. Either this for product changing your cards to generate more referrals. But that one in particular is the one that seems that be the issue, since most people have gotten the letter after the “manual points adjustment”

Rov
Rov

agreed. I don’t know what people are talking about but it would be nice if we could just call it what it is so everyone is aware. Obviously I don’t plan to try whatever it is since Chase Is clearly cracking down. But it would be nice to be informed

Matthias
Matthias

That is the more shady method that caused the letters. The more innocent method that caused the letters is just using an old referral link from before PCing it to another card.

Summary: just give people the referral links from Chase exactly as you get them, don’t use old ones or modified ones.

Steve

Was it just for using a link created that way, or only people who exceeded 5 referrals per card?

LC
LC

Chase recently closed my entire familys chase cards… only 1 of the persons signed up for a chase card recently. chase is just butt hurt at us churners. all good, ill still churn their bank bonuses

Jim
Jim

Very unfortunate, mind sharing more details?

Joey
Joey

What?? More details needed

Lc
Lc

We have been going heavy on apps last 2 years, which is not unique to churners. Apparently all it took was 1 person getting approved for chase card through business pre approval offer… Got baited into signing up, they then reviewwed that person credit report 2 weeks after open and closed the accounts of that person. Then closed all accounts of people at same address.

Filing 3 separate CFPB complaints. But I’m pretty sure they won’t reopen .

Lc
Lc

Went from thinking we would get CIP, and business cash (was $1k away from spend on CIP) to entire family cards closed including 5-10 year old cards. Really do not like this bank at all.

Frank Rizzo
Frank Rizzo

Could you please describe what you consider heavy?

P
P

When I read the title I had to rush and view the article. But thankfully I don’t get referrals so I’m safe. Whew.

Leo
Leo

+1

Newbie
Newbie

Chase is lucky to get more than 5 referrals from card holders because they keep sending me emails all the time for referring my friends but I am not referring anyone. There are many who just don’t want to refer anyone and keep it private.

joe
joe

This is a bit off topic, but i referred my SO for CIP. I was credited the 20k UR for the referral and it was clawed back a couple weeks later. I wonder if theres a new RAT team out there….

Matt
Matt

Do you know why?

Miya
Miya

Does the clawback show in the Rewards history page? Now I’m a bit paranoid.

Burton
Burton

Is it not OK to refer a spouse? I thought that would have been one of the primary sources of referrals.

lenin1991
lenin1991

I had four letters in my mailbox today from Chase, having seen this, I almost fainted. But they each turned out to just be balance transfer offers for my various accounts

steve
steve

reap what you sow

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