【Updated 2020.4】Recently, there have been several more reports of AMEX shutdowns. The people getting shut down were not exactly AMEX beginners either—they had already been through FR if needed, and had gone through a round of card applications years ago. One fairly consistent pattern is that many airline reimbursements were recently clawed back. What made this wave especially brutal is that MR points were wiped out by AMEX directly, with no chance to transfer them out in advance. My guess is that people who opened multiple Platinum cards, or who opened Platinum cards mainly to cash out the credits, may have been targeted this time. Based on the current DPs, the scope does not seem very wide. It is also possible that AMEX is trying to clear out a group of lower-value, higher-risk users, especially those holding multiple charge cards. In any case, everyone should be more cautious recently when opening or closing cards. These are unusual times, and banks are likely to make bigger moves.

About AMEX Shutdowns

Today, many AMEX cardholders posted on Reddit saying that their AMEX cards had been shut down. Importantly, they were shut down without first going through a Financial Review.

Anyone familiar with AMEX knows about the dreaded Financial Review (FR). Usually, when AMEX has doubts about your credit or your ability to repay, you may get a call from an unfamiliar number asking you to provide your prior-year tax return to prove that you can pay your balances. If you cannot provide sufficient tax documentation, your AMEX credit limits may be reduced; for charge cards with no preset spending limit, AMEX may also place a cap on them. It can take around a year for that to be lifted. If your income makes AMEX think you cannot repay, or if you simply cannot provide a tax return at all, AMEX may shut down all of your cards.

This time, however, AMEX skipped the FR step and went straight to shutdowns. That makes it feel like AMEX has really stepped things up and is willing to take much harsher action.

Case Analysis

【Updated 2019.11】Reddit has collected quite a bit of shutdown data, along with data from many helpful users about their card usage. From this information, we can still draw a few conclusions:

Analysis of the shutdowns:

  • Looking only at the raw numbers, most people who were shut down had been very aggressive with card applications. Since self refer only became available in the last six months, many of them probably opened a lot of cards during that period.
  • One exception listed only 3 cards, but the reason given mentioned multiple copies of the same card, which makes it a bit strange. Was it multiple Gold cards for supermarket spending? Or a short credit history combined with heavy spending right away?
  • Did MS matter? I think yes, but not as the deciding factor.

Examples of people who were not shut down:

  • I specifically filtered for people who had opened many cards in 24 months. You can see that their behavior was actually very similar to the group above that got shut down.
  • What the spreadsheet does not show is: cards opened in the last six months (maybe they opened fewer recently), spending on each card (maybe each card had at least some real spend), and credit history (maybe their credit history was longer and their scores were higher).

What should we do?

  • Compare your situation against the data. I think most readers are probably not in the same tier as those who got shut down.
  • If your profile looks similar to those who were shut down, start putting some ordinary non-bonus spend on your AMEX cards right away. Also, it is best to stop opening new cards for a while, whether with AMEX or other banks, and take a break.
  • If you have already been shut down, transfer out your points as soon as possible.

Possible Reasons

After reading through the thread carefully, most of the discussion focused on the following possible reasons:

  1. Did you do manufactured spending in bonus categories?​ For example, did you do MS such as buying Visa gift cards to earn bonus-category rewards?

  2. Did you do multiple pay-over-times? This is a feature AMEX introduced that effectively lets a charge card function more like a credit card. Usually people just enroll when there is a bonus attached; I do not think many people actually use it for its intended purpose.

  3. Did you do self-referrals?​ AMEX-generated refer links could be used to apply for your own cards. If approved, you could receive both the welcome bonus and the referral bonus from referring yourself. AMEX later clawed back those bonuses.

  4. Have you ever had a financial review?​ This is the FR mentioned above, and normally it would happen before a shutdown.

  5. Did you know certain methods that can reset spend limits?​ I am not exactly sure what this refers to—does it mean spending and repaying within the same month, or some other trick?

  6. Do you have multiple of the same cards?​ In other words, what we usually call churning the same card—for example, using links with no lifetime language to open the same card repeatedly, especially just for reimbursements.

  7. Did you apply for the no AF Hilton Aspire that was linked today? This was the Hilton Aspire link that appeared on November 4 with no first-year annual fee, but it died within half a day.

Since most people who were shut down did not apply for that Aspire offer, we can treat #7 as unrelated.

Here are my personal views:

  • Probably not related to Pay Over Time: This is a niche offer to begin with. Even if you used someone else’s link to get an enrollment bonus, the amount was limited and generally just a one-time bonus. That alone should not get your entire relationship shut down.
  • Probably not strongly related to MS: Buying Visa gift cards at supermarkets is not new to AMEX. Aside from earlier situations when OBC had no cap and there were some direct shutdowns, AMEX later added caps to most cards. I have not really heard of people being directly shut down just because of MS. At most, they would get an FR and then have their charge card spending ability capped. Since this round involved direct shutdowns, MS probably was not the main reason.
  • Probably not strongly related to Reset Limit methods: If AMEX thought you were spending too much and could not repay, it would likely have done an FR first.
  • Self Refer may matter, but only indirectly: The self refer bonuses were already clawed back, which means AMEX had already penalized that behavior. There were also people with lots of self refer activity who were not shut down. I will discuss the indirect connection below. (If AMEX still shut people down over self refer, that would be a pretty direct attack on single people.)
  • Holding multiple copies of the same card does seem somewhat related, but it is only one factor: More on that below.

I think the shutdown email from AMEX helps confirm the points above:

  • We want to let you know that after a recent review of your American Express® account (s) , we have cancelled the accounts referenced above because one or more of these accounts, or other accounts to which these accounts are linked, have been identified as not being used for the intended purpose.

The key question is what counts as an “intended purpose.” In most people’s minds, a big reason to apply for a credit card is obviously the attractive welcome bonus, but the main reason should still be that the card is worth keeping and worth using. That, in my view, is what AMEX means here by “intended purpose.” So when they say the card is “not being used for intended purpose,” I think that can be understood as: you got the card only for the welcome bonus, met the required spending, then tossed it in a drawer and ignored it until closing it after a year. Banks really dislike this kind of behavior, especially a bank like AMEX that offers large welcome bonuses.

  • Quick side note: one blogger previously had an AMEX affiliate link, meaning he could earn a commission when readers applied for AMEX cards through his blog. But the customers he referred were apparently low-value customers who stopped using the card after earning the welcome bonus and closed it a year later. So AMEX revoked his affiliate-link privileges. That shows AMEX pays very close attention to how customers actually use their cards.

Of course, it is also possible that some people were using the card for self-referrals, which also would not be an intended purpose, but as mentioned earlier, those points had already been clawed back.

So aside from this kind of bonus-chasing behavior, what else may have caused these shutdowns? After all, many of us do something similar, yet most people have not been shut down. My personal view is that application frequency is another important factor. If you open one new card per year, AMEX can probably tolerate that level of bonus chasing. But if you are opening a new card every three months, every month, or even multiple times a month (charge cards are not subject to the 5-card limit), and even frequently closing old cards just to make room for new ones, that makes things much worse. So in my opinion, people who do a lot of self-referrals are often also the ones applying for cards very frequently and abandoning the cards after earning the bonus, which makes self-referral more of an indirect factor. And people applying through no-lifetime-language links are also very likely to fit this same pattern of high application frequency and bonus-first behavior.

There is another change that has reinforced this pattern: AMEX stopped allowing multiple cards to add the same AMEX OFFER. In the past, you could load the same good offer onto multiple cards, which indirectly encouraged people to pull out each card once in a while and use it for those deals. From AMEX’s perspective, that spending pattern might not have generated huge swipe-fee revenue, but it was still far better than cards that were used only long enough to earn the bonus and then left in a drawer.

What should we do?

If your accounts have not been shut down

  • Stop doing self-referrals. Try referring back and forth with friends instead. In any case, self-referrals no longer earn rewards. If you really cannot find a referral link, you can check this site’s credit card pages—most of the links there are referral links, haha.
  • After earning the welcome bonus, at least keep using the card occasionally. Buy a coffee, or use it for a small Amazon purchase. The extra rewards may not matter much, but it gives the bank’s algorithms more reason not to flag you. After all, the people AMEX really wants to shut down are the small minority who take things too far. In fact, AMEX cards often have strong rewards and good benefits anyway. More spending can also help you get past the pop-up and potentially receive better retention offers. I believe many readers already have an AMEX card as one of their primary cards.
  • Given the current climate, reduce how often you apply for new cards and put more spend on the cards you already have. Most AMEX cards only let you earn the welcome bonus once per lifetime, so there is no need to rush applications anyway.

If your accounts have already been shut down

  • Call immediately and see whether you can still redeem your Membership Rewards points over the phone. If you can, quickly decide which airline partner to transfer to—ANA, Delta, and AC are all solid options. If you do not have many points, you could also redeem for merchant gift cards instead, such as a Nike gift card. MR usually redeems at 1:1 for those. It is not a great value, but if you do not have many MR points left, it may be worth considering, and customer service can mail you a physical gift card.
  • If your points are also frozen and the amount is significant, you can consider filing a CFPB complaint. Based on the analysis above, AMEX may have a defensible reason from the bank’s perspective—they are trying to reduce low-value customers. But from the standpoint of the financial industry, outright shutdowns like this may still be subject to CFPB complaints. One thing to note is that AMEX tends to be slower and less cooperative in handling CFPB cases than traditional banks like Chase, BofA, and Citi. Filing with the CFPB usually does not make a bank hold a serious grudge against you, but keep your language measured and leave yourself some room.
  • Points from co-branded cards (Delta, Marriott, Hilton), as well as free-night certificates or elite status, usually cannot be directly frozen by AMEX because those are outside AMEX’s direct control.
  • If you have the time and energy, you could even consider small claims court. If not, it may be best to move on. This kind of shutdown is different from an FR shutdown, and I think there is a good chance it could land you in AMEX’s “pop-up jail” or internal penalty box for a while. Suing the bank might even put you there for life, so I would not recommend it unless absolutely necessary.
  • Will it affect other people at the same address? With FR, it is possible for others at the same address to be affected too, because you live together, spend money together, and may be viewed as sharing risk. But for this kind of bonus-abuse behavior, I do not think it would usually spread to others at the same address.