About AMEX Clawing Back Various Rewards

AMEX used to be known for its generosity, premium positioning, and strong customer service, but times have changed. In recent years, it has rolled out one anti-abuse rule after another, and enforcement has been quite aggressive. We have already seen examples of clawbacks involving welcome bonuses, AMEX Offer statement credits, and spending rewards on co-branded cards.

To be fair, AMEX has already addressed this in the terms: eligible purchases do not include cash equivalents. In other words, if your spending falls into these categories, both the base points and any bonus points earned from that spending could potentially be clawed back.

Eligible purchases do NOT include fees or interest charges, 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.

Other banks, however, generally do not enforce this on a large scale, and often look the other way, such as Chase and Citi. This kind of retroactive clawback from AMEX is especially unusual.

Home Improvement 4x Clawed Back

Back in April of this year, AMEX offered an extra Home Improvement 4x bonus to people who referred others. The offer included merchants such as Home Depot and Lowe's, both of which sell Visa/Master gift cards. The cap on the extra 4x was $25,000, which was very generous.

For people familiar with manufactured spending (MS):

  • the cost of buying Visa gift cards is about a 1% loss,
  • you could earn 4x (bonus) + 1x (Lowe's AMEX Offer) + 1x (base earnings) = 6x, which at an MR valuation of 1.6c/p works out to roughly 9.6% back,
  • maxing out the full $25,000 could mean around $2,000 in profit.

So quite a few people jumped on this and bought large amounts of VGC/MGC for cash-out purposes. Unfortunately, AMEX cracked down a few months later and clawed back some of the 4x bonus points.

  • First, people received an email saying that AMEX would confiscate some Membership Rewards points.
  • After logging in, they found a large chunk of points had already vanished. Based on the numbers, it appears that most of the extra 4x was clawed back.

Based on the email, the reason for the clawback was the purchase of cash equivalents.

If the type of spend wasn't eligible to receive pointsThis applies to Travelers Cheques, prepaid/gift cards, person-to-person payments or other cash equivalents, or purchases that don't represent the exchange of goods or services

Hilton/Delta/Marriott Co-Branded Card Spending Rewards Clawed Back

[2020.9 update] Some people have already received an official explanation letter. The issue appears to be purchases of Visa gift cards or other prepaid cards. If AMEX is using level 3 data to identify these transactions, then mixing in other items in the same purchase probably will not help much. My guess, however, is that AMEX only triggers a review once spending reaches a certain amount, so small purchases of Amazon gift cards or other third-party gift cards may still be safe. (Image via DOC)

 Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of traveler’s checks, person-to-person payments, the purchase or reloading of prepaid cards, and purchases of other cash equivalents.

[Additional note] According to DOC, the pandemic-era grocery multipliers on Delta (4x) and Marriott (6x) also started to be clawed back.

Previously, we wrote about AMEX Hilton Aspire's pandemic benefits, and two of them were especially attractive.

  • 12x at grocery stores: valid only from May 1 to July 31, the 12x earning rate was worth roughly 5% back, and with no cap it was quite appealing (the usual rate was 6x)
  • Points count toward lifetime Diamond: Hilton points earned through spending on this card from May 1 to December 31 could count toward lifetime Diamond. If you really love Hilton, honestly, just holding this card already goes a long way.

Because 2,000,000 Hilton Base points plus 10 years of Hilton membership can get you lifetime Hilton Diamond status, the highest tier. Specifically:

  • 10 years of Hilton Diamond status: it does not need to be consecutive, and the Aspire card makes this easy to achieve
  • 2,000,000 Hilton Base points: during the pandemic period, all Hilton points generated by credit card spending counted, which means 2,000,000/12=$166,000 in grocery spending could get the job done.

Of course, you may already have earned some Hilton Base points through hotel stays or other spending. So a number of heavy hitters wanted to take this opportunity to use grocery store MS to meet that 2,000,000-point target.

However, according to reports from M2M and its readers, some people did not see the 12x points post on time after completing grocery spending. More recently, some people even had points that had already posted clawed back.

  • 300,000+ did not post but it has been less than a week
  • 300,000+ points have not posted in over 30 days
  • 150,000+ points have not posted in over 3 weeks

Some people found that points from grocery purchases above $100 did not post, while other purchases posted normally.

Today, July 4, I had points activity in my Hilton account for the first time since mid April. Although I can’t get the numbers to match exactly, AS OF NOW, it appears they deleted all grocery transactions with a spend above $100. Restaurant and gas posted correctly for my June statement.

My Take

In theory, since AMEX spelled this out very clearly in the terms, and these ineligible purchases are not supposed to earn bonus multipliers, there is not much we can do. If you feel this is unfair, you could try filing a complaint with the CFPB or even going to small claims court, and it may be possible to recover some points, but ending up in pop-up jail is probably unavoidable.

For future promotions like this, everyone should be careful. AMEX really can go back and revisit old activity. If you insist on playing this game, I strongly suggest either keeping the amounts smaller or mixing in other items, so you avoid the common fixed-dollar amounts often associated with certain Visa gift cards.