[Update 5/2020] A reader recently shared an email saying that their Delta welcome bonus was going to be clawed back. The reader applied for this card using the previous Delta homepage no-lifetime-language loophole and successfully received the welcome bonus. They closed this Delta Gold card in less than 10 months because they felt they would not be able to use the card during the pandemic, so they canceled it before the annual fee posted. After that, they received this email. So far, the Delta miles have not yet been taken back. If they contact customer service to reopen the card, they may be able to keep the miles from being clawed back.

Personally, I think AMEX may not go to a partner airline to claw back an award for this, but if it is AMEX’s own MR points or cash back, you probably won’t get away with it. As for whether AMEX would charge this card a certain amount based on the value of the welcome-bonus miles, that is unclear. In the current environment, it is hard to rule out AMEX taking a much tougher approach. So my suggestion is: if you want to close a card, it is best to wait until the annual fee is charged, then immediately use online chat or call to close the card. If you contact customer service within 30 days, they will refund the entire annual fee. You do not need to pay the annual fee off in advance; as long as customer service completes the closure, the annual fee will be automatically refunded within 1-2 days.

In addition, DOC shared a case where someone asked to reopen a card after closing it, and customer service said there would be a fee. If you change your mind after closing a card and want it reopened, you may need to pay a $25 fee.

Background

AMEX has long been known for being generous to customers. But recently, it has started aggressively clawing back welcome bonuses on some credit cards. The earlier 100,000-point Platinum card welcome bonus was hit especially hard, and many experienced points enthusiasts got caught up in it. This article summarizes the current situation, analyzes possible reasons, and offers some suggestions.

Recently, quite a few people on forums have posted that AMEX clawed back the 100,000-point welcome bonus on their AMEX Platinum card applications from May 2016. In all of these cases, they received no warning from AMEX. They only discovered it when they logged into their account and noticed that their Membership Rewards balance was down by 100,000 points; after checking the details, they saw it listed as Point Adjustment.

amex-platinum

Even worse, AMEX did not start clawing these back until more than 3 months after the spending requirement period for the welcome bonus, so people had no time to fix the situation. Even if you had already used your MR points, your account could go directly negative, and reportedly they may later charge you at a rate of 2.5c/p. And that is not all: this round of welcome-bonus clawbacks is still continuing, and it may even be intensifying. The reasons for these clawbacks, and the AMEX cards affected, are also increasing.

AMEX’s official explanation for clawing back bonuses

In the card application terms that applicants must agree to, AMEX has explicitly stated which behaviors can result in a bonus clawback—essentially a formal declaration of war on people trying to game the system (HT. DOC). The newly added language is as follows:

  • Gift card purchases and P2P transactions do not count toward minimum spending: This originally referred to Visa gift cards, but now that it simply says gift cards, it should also include store gift cards. A typical example of P2P spending would be sending money to friends through PayPal or similar services.
  • Applying through targeted offers not intended for you can result in a welcome-bonus clawback: For example, one of the 100,000-point Platinum leaked links mentioned below was actually targeted to a specific person, but once it was leaked, many people used it to apply.
  • Downgrading or canceling within 12 months of opening the card can result in a welcome-bonus clawback: As mentioned below, some people had their bonuses clawed back for exactly this reason. Since AMEX specifically set 12 months as the cutoff, I think downgrading or canceling after 12 months should still be safe.
  • Using returns to meet the spending requirement: Some people in the previous clawback wave also fell into this category, including those whose airline incidental reimbursements were removed from qualifying spend. So it is still a good idea to spend a bit above the requirement to avoid this situation.
Purchases to meet the spend requirement do NOT include fees or interest charges, balance transfers, 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. Miles will be credited to your account 6-8 weeks after you reach the spend threshold. If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome bonus 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 bonus 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 welcome bonus to, we may freeze the welcome bonus credited to, or we may take away the welcome bonus from your account. We may also cancel this Card account and other Card accounts you may have with us.

I checked the terms for all AMEX personal credit cards on the AMEX website, and the following cards have added this new language:

  • AMEX Starwood Preferred
  • AMEX Delta Gold
  • AMEX Delta Platinum
  • AMEX Hilton
  • AMEX Hilton Surpass

All of the above are AMEX co-branded credit cards. AMEX’s own MR card lineup has not yet added this new language, but I would guess it is only a matter of time.

My take: Even though this language was only recently added to the application terms, AMEX’s earlier bonus clawbacks had already made its target clear. While AMEX listed several specific examples of conduct that could trigger a clawback, it still reserves the final interpretation. Personally, I do not think buying gift cards is automatically forbidden, but if you are clearly doing it only to meet the minimum spending requirement—for example, buying 500 at a time, 4 times in a row—that is probably not going to fly. Could AMEX identify every gift card purchase? Probably not, since not every merchant provides level 3 data.

Examples of welcome-bonus clawbacks and possible reasons

Clawed back for closing the card within 12 months

[Update 4/10] Today on doc, I saw two data points where people had their sign-up bonus or upgrade bonus clawed back because they closed the card within 12 months after opening or upgrading. So my recommendation is that after opening a new card, you should wait until the full 12 months have passed, then wait for the annual fee to post, and only then quickly close or downgrade the card—do not do it early. Upgrades are even trickier, because the upgrade date and the annual-fee posting date are different. That means when your next annual fee posts, you may still not actually be 12 months past the upgrade date, so the bonus could still be clawed back. Be sure to keep track of the date of your upgrade or product change. Overall, I think this hard 12-month rule is pretty unreasonable; if it is only off by a few days, there is no real need to be that strict. They really only need to focus on people gaming the system by closing within three or six months.

[Updated 10/22] Upgrade bonuses can also be clawed back! According to a DOC report, two readers previously upgraded their AMEX cards to higher-tier versions (such as Green->Platinum) and received upgrade bonuses. However, they later downgraded within 1 year of the upgrade, and the upgrade bonuses were ultimately clawed back. So, I recommend keeping track of your upgrade date and waiting until after the full first year before downgrading. Don’t see the new annual fee post and immediately downgrade. Of course, newly opened cards also need to be kept for a full year; in that case, you can downgrade as soon as the annual fee posts once you’ve confirmed a full year has passed.

Opening cards only for the welcome bonus and not receiving the bonus

AMEX has long written in its credit card application terms that if you apply for an AMEX card solely for the welcome bonus, you may be denied the bonus. I used to think this was just AMEX leaving itself a back door in case it wanted to claw back bonuses later, and that it wouldn’t really be enforced. That changed when I saw a DP of someone actually being denied a welcome bonus. Details below:

  • Example: The poster applied for multiple AMEX cards in one year and was approved for all of them. But after meeting the minimum spending requirement and receiving each bonus, they stopped using the cards. The last two cards they applied for, Delta Gold and Everyday Card, had their spending requirements completed, but the bonuses never posted. After contacting AMEX via chat, AMEX gave the reason behind it (shown in the screenshot). In short, AMEX believed the applicant was applying purely for welcome bonuses, so the applicant was categorized as ineligible for such bonuses.
  • What to do: You can see that this dedicated team has a lot of authority and can even later override an initially awarded welcome bonus. My suggestion is that after meeting the spending requirement on an AMEX card, you should still keep using it a bit, such as for AMEX Offer purchases. Also, don’t go on an application spree within a single year. Since the bonus is once per lifetime anyway, it’s better to slow down.
  • Data Point from dealmoon

AMEX Platinum 100,000 (leaked link from 2016.5)

Most of the clawed-back welcome bonuses were from cards applied for in 2016.5 through a leaked targeted link, and it seems the cleanup is still continuing. The likely reasons are summarized below:

  • The $3,000 minimum spending requirement was met by purchasing Cash Equivalence: for example, buying Visa gift cards at simon mall or at grocery stores
  • The $3,000 minimum spending requirement was met by loading a Prepaid Card: loading AMEX Serve to complete the spending requirement
  • The $3,000 minimum spending requirement included AMEX offer credits or refunds: for many people, the $3,000 did not exclude AMEX Offer statement credits or refunds after purchases. Although they received the welcome bonus at the time, this cleanup wave also clawed those bonuses back.
  • The $3,000 minimum spending requirement included airline reimbursements: a few people whose bonuses were clawed back said that if the airline reimbursement portion was excluded, their spending fell below $3,000, but they were able to get the 100,000 back after communicating with AMEX or filing a complaint with the BBB
  • Closing the card too early after receiving the welcome bonus: they closed the card too early in order to get part of the annual fee refunded, Example 1
  • Product-changing the card after receiving the welcome bonus: after three months they downgraded to a Green Card and got part of the annual fee refunded, but the bonus was still clawed back in the end, Example 1

My analysis: In the first two scenarios above, Visa gift cards are generally considered cash equivalents, and Serve is a classic Prepaid Card. AMEX actually states in the terms & condition that spending used to qualify for a welcome bonus does not include the following:

am1

As for AMEX Offer credits, those are treated as discounts provided by AMEX. They do not earn MR in the first place, and they also do not count toward the minimum spending requirement. Actual airline purchases do earn MR points, and reimbursements do not deduct MR points, so they are generally considered to count toward the welcome bonus requirement. So I think it makes sense that some people were able to get their bonuses back after contacting AMEX. AMEX didn’t seem to care much before about closing cards too early after receiving the bonus, but this time it clawed those bonuses back too. It looks like they’re tightening up.

Actually, there were warning signs before this clawback wave targeting the Platinum 100,000 welcome bonus. The 2016.5 Platinum 100,000 application link was not a public link you could find on the AMEX website; it was more like a targeted-offer link. After it leaked, people probably rushed to apply for it. After receiving a large number of applications, AMEX decided to freeze the 100,000 welcome bonus first; that portion of MR could not be transferred to airline miles or redeemed. This shows that AMEX manually reviewed the accounts of applicants who used the leaked link. That also helps explain why buying Visa gift cards to meet the spending requirement, which had not been a problem before, was flagged this time.

Previously, AMEX generally didn’t care about closing cards or product changes, but for this round of applications from the leaked link, AMEX was very strict and clawed back bonuses for cards closed or changed within a year. So if you still have this Platinum card now, I’d suggest keeping it for a full year before making any changes.

Mercedes-Benz Platinum 75,000 clawed back

  • Clawback triggered by Financial Review: I previously saw a Reddit user who had also applied for the 100,000 Platinum offer in May. After receiving the welcome bonus, they were hit with an AMEX Financial Review. After that, both the Platinum 100,000 and the Mercedes-Benz Platinum 75,000 welcome bonuses were clawed back. According to that person, all of the minimum spending was completed through Visa gift card purchases. My guess is that during the FR, AMEX identified the spending pattern and simply clawed back all related card bonuses.
  • Triggered by the Platinum 100,000 clawback: Most of the minimum spending was done with Visa gift cards, and after the account was unfrozen, all points were transferred out. But in the latest wave, both the Mercedes 75,000 and Platinum 100,000 bonuses were clawed back. My guess is that once the Platinum 100,000 triggered a review of the MR account, other bonuses that did not qualify were also clawed back.

Multiple Business Gold Rewards bonuses clawed back

  • Churned four Business Gold Rewards 75,000 offers: One person applied for four BGR cards in one month. After receiving three welcome bonuses, the MR account was reviewed, and in the end only one bonus was allowed to remain. Although all four were targeted offers, and the promo terms did not say that prior bonuses would make the new one ineligible (based on prior experience, these would usually still get the bonus), my guess is that AMEX manually reviewed the MR account, saw that something was off, and clawed back the extra bonuses. So if you’re going to churn targeted offers, it’s best to space them out.

Targeted spending offer rewards clawed back

AMEX has another new move: spending used toward targeted spending offers is now also being restricted, and if gift cards were involved you may not receive the reward. In addition, AMEX changed the Membership Rewards earning terms in March statements, adding restrictions across a number of categories so that purchases in those categories will not earn MR points. Details are as follows:

  • Source: Milesperday: Some people recently used gift cards (from Simon Mall) in an attempt to meet targeted spending offers for existing cardholders, such as spending $10,000 to earn an extra 15,000 points, but the bonus never posted. After contacting customer service and having the issue investigated, the final reason given was that those purchases were all gift card purchases. Just a reminder here: Simon Mall has already been heavily flagged by AMEX, so I would not recommend taking the risk.
  • Source: Travelwithgrant: In March statements, AMEX notified users that the terms for earning points had been revised, and certain types of purchases listed below will no longer earn points. Compared with the previous version, the main additions were the purchase and reload of prepaid cards, online AMEX gift cards, P2P payments such as apple pay/Paypal, and other cash equivalents. Personally, I think the change in terms is mainly to give AMEX stronger justification for penalizing users in the future, while also reducing the legal risk that comes with clawbacks and shutdowns, since plenty of people have sued AMEX over confiscated points. That said, we still do not know how aggressively this rule will actually be enforced, because not every merchant passes detailed transaction information to AMEX. We can only say that AMEX has begun cracking down on MS, and it remains to be seen whether other banks will follow.

Welcome bonuses on other cards clawed back

  • Other Membership Rewards-earning cards: None so far
  • AMEX airline and hotel co-branded cards: None so far

Example roundup

Today I saw a post on Reddit. The poster used the AMEX Platinum 100,000-point application link that resurfaced around Thanksgiving at the end of 2016, and the points were frozen. AMEX then dug through the poster's history and found that the minimum spending requirements on several prior AMEX cards had been met through purchases of cash equivalents, so AMEX clawed back 175,000 Membership Rewards in total, leaving the account with a negative points balance. So everyone should be careful. If you previously used MS to meet spending for a welcome bonus, you may be better off just applying through a normal link. Also, avoid doing anything else that could trigger an AMEX review.

How to respond

Now that AMEX has started cleaning house, whether or not we are directly affected, we should all think about how to respond. Here are a few thoughts for different situations:

  • If you applied for the May 100,000-point Platinum offer and your bonus has already been clawed back: If your welcome bonus was clawed back because AMEX decided you did not meet the spending requirement, you can try contacting AMEX and asking to speak with a supervisor to see whether they will let you make up the missing spend. If you only fell short because of the airline reimbursement credit, call a few more times; you may still get it. If nothing works, you may just have to move on. If your 100,000 points have already been transferred out and your MR account is now negative, it is probably best not to close all of your MR-earning cards, because there are reports that AMEX may try to collect at a rate of 2.5c/p.
  • If you applied for the May 100,000-point Platinum offer and your bonus has not been clawed back: If all of your spending was legitimate, and after subtracting airline reimbursements, returns, and AMEX Offer credits you are still above $3,000, you should probably be fine. Do not rush to close the card. Once you have held it for a full year, you can cancel within 30 days after the second annual fee posts and get that second-year annual fee refunded. Since closing now will not get you a partial annual fee refund anyway, you might as well enjoy a year of premium benefits. If your qualifying spend was under $3,000, it is probably better not to transfer out the 100,000 points yet and just wait and see. In particular, do not put large amounts of spending on the AMEX Platinum or other AMEX cards, and do not continue buying Visa gift cards. If you trigger an FR, AMEX may very well review the welcome bonus spending on all of your cards.
  • If you applied for other AMEX cards and your minimum spend included VGC/Serve: Things are sensitive right now, so it is best not to put unusually large spending on AMEX cards or continue buying Visa gift cards. If you trigger an FR, AMEX may review the spending used to earn bonuses on all your cards. If you are still within the first three months after opening the card, it is best to use normal spending to fully satisfy the minimum spending requirement and avoid unnecessary problems later.
  • If you are planning to apply for an AMEX proprietary card or have not yet met the minimum spend: Try to move as much ordinary spending as possible onto the AMEX card. If you want to buy Visa gift cards, use cards from other banks for that. For now, Citi, Chase, and Barclays do not appear to have special restrictions on using Visa gift cards to meet minimum spending requirements.
  • If you are planning to apply for an AMEX airline or hotel co-branded card, or have not yet met the minimum spend: So far, I have not seen cases where AMEX clawed back airline miles or hotel points. My personal view is that AMEX probably does not have the right to take back points that have already been sent to an airline or hotel program, so those are temporarily safer. If you insist on using VGC/serve to meet minimum spending requirements, it is better to avoid AMEX's own cards and do it on co-branded cards instead, which should be somewhat safer.

Lessons for us

  • Until points or miles are redeemed, even if they sit in your own account, they still belong to the issuing company. They have the right to claw them back, and we have the right to complain.
  • No technique lasts forever. AMEX is now targeting welcome-bonus spending done through Visa gift cards, and we do not know whether other banks will follow.
  • When meeting minimum spending requirements, do not spend the exact required amount every time. Going $100-$500 over is safer, especially for purchases that might later be returned.