It looks like there has been a wave of American Express shutdowns with many reports across US Credit Card Guide forums and /r/amex (compiled list of datapoints can be found here). The common trait seems to be a lot of international spend, with buying groups focused on purchasing internationally being the biggest hit.
The whole BG scheme sounds benign, but it really brings great challenge to bank’s risk management algorithm.
Imagine a (international) student with zero income doing this BG and recycling their CL again and again. They can make big-ticket purchases every week/month and always pay off credit card balance in full. Six months or a year later, algorithm is tricked to believe they are rich and reliable customer, boosting their credit score from 500 to 800 and increasing their CL from $500 to $30000.
One day they max out the card, walk away with $30000 cash, and default/flee. The bank is left without recourse.
My guess is that this already happens a lot, prompting Amex to bust the BG network.
It’s basically crowdsourced manufactured spending. Low profit margin, low risk, but extremely high revenue (say 10mm every month). That’s $1.2mm annual income if BG owner keeps profit margin at 1%.
Wow. They deleted the post due to DoC covering it. I read parts of it and it seems like it was related to billpay. From the responses it’s pretty clear to me that they were doing things that US users are not aware of so most if not all readers here should be safe
This is a sign that Amex is upgrading their algorithm, and possibly adding more AI features. It has become better at looking at spending patterns, and weeding out unprofitable customers or MSing.
BG activity isn’t unprofitable, by itself. Churning for SUBs can be, but the spend is at Wal-mart, Amazon, Best-Buy for Apple and tech products. Nothing different from a business owner or wealthy consumer. They still get their cut. International changes the risk profile though.
no more international travel due to self-imposed tariffs way to go AMEX
American Express: Leave Home Without It
Seems to me this would only effect people who are doing something untoward, that is probably forbidden somewhere buried deep within the cardholder’s agreement. A US Citizen living in a foreign country doing “normal” things has nothing to worry about. Yet another case of people doing things they shouldn’t be doing.
How is that different than 99% of these types of posts? 😉
Good riddance. Hopefully this enables Amex to reduce their merchant fees by 0.00%. This will trickle down to consumers for an average savings of $0.00 per transaction.
You know visa infinite cards have higher swipe fees right?
you know Amex has different tier of swipe fee per card category AKA interchange etc?
I’m all for kicking out violators but you have to be on something if you think this will lower fees.
r/woooosh
Do you even coupon bro?!?
Anyone care to explain what is actually being alleged?
Dear William. Regurgitating undigested content of a second rate third party is not beneficial to the thing you’re trying to do.
I disagree. I appreciate updates like this and trust the judgment of William and Chuck to decide what we should see.
“Indicia”? Fancy.