About This Round of Shutdowns

Over the past couple of days, we’ve gradually seen data points from readers and online communities about Chase shutdowns. It does not seem to have generated a big reaction in the English-speaking points-and-miles community yet—at least we have not seen many English bloggers write about it—but there has been some discussion on English-language forums. Based on the data points available so far, here is a rough analysis of the situation and the possible reasons behind it.

What These Shutdowns Look Like

In the past, Chase shutdowns often meant a full shutdown, meaning all Chase cards were closed at the same time. Of course, the trigger might have been activity on only one specific card, but once triggered, all cards would be shut down. This round appears to be somewhat different:

  • Some people had only part of their portfolio shut down, but all cards related to UR were closed. There are also cases where all cards were shut down at once.
  • Checking and Saving accounts do not appear to be affected.
  • Affected users were given 30 days to transfer out or cash out their UR points.

Previously, one common reason for a full relationship shutdown was making large cash deposits into checking or saving accounts. In those cases, Chase would usually first close the checking account or similar accounts, then close all the credit cards as well. Another possibility was abuse of UR, such as buying or selling points, which also typically led to all cards being shut down. There were also cases involving abuse of the Pay Yourself Back feature on a Chase co-branded credit card, and in that scenario only one card would usually be affected. That is why this round of shutdowns seems unusual to me.

Possible Reasons

Protein Powder

Based on the data points we have seen so far, one possible cause may be the protein powder deals. I saw two data points in our group where the users did not seem to have any obviously high-risk behavior, but both had purchased protein powder.
UR

  • Did not play with Chase Offer at all; only bought protein powder, and still got shut down.
  • Also had normal spending patterns, but still got shut down; had bought protein powder a few months ago.

We previously published an article about PayPal closing accounts because of protein powder purchases. At the time, we speculated that PayPal might have locked accounts in advance and held balances in order to prevent a wave of charge back claims.

The same logic may apply to Chase. If many people never received their protein powder, they could use the credit card charge back process to ask the issuer to remove the balance. By that point, Chase would already have paid the protein powder seller Rebate Key. Chase would first have to reimburse the cardholder, and then try to recover the funds from Rebate Key. If Rebate Key has already gone bankrupt, Chase may recover nothing. It is reasonable to think that a large number of users—or a large dollar amount—in charge back claims could be a serious problem for Chase, so preemptively shutting down some so-called high-risk accounts is at least possible.

  • There is similar speculation on English-language forums as well.

That said, this still does not fully explain why Chase would close not just the card used to buy the protein powder, but all UR cards. It may be that, from a risk-management perspective, Chase simply does not want to continue the relationship with that customer. As for co-branded cards, shutting those down may involve partner considerations, so Chase may have held back somewhat there. Also, many people bought protein powder and were not shut down, so it is still hard to draw any firm conclusion.

Other Possible Reasons

Of course, some affected users have also mentioned other potentially high-risk behaviors, such as:

  • Using refunds to game Chase Offer, since the statement credit from the offer may not be clawed back after a refund, effectively letting you keep the offer money for free.
  • Opening and closing a relatively large number of cards recently.
  • Using refunds to game the hotel credit on the Chase Sapphire Preferred, where the reimbursement might not be clawed back after a refund. (Personally, I do not think the scale here is large enough to matter much.)

These behaviors could certainly be triggers as well. It is also possible that Chase has started tightening up and reviewing users from multiple angles.

How to Respond

It is still unclear whether this is just a one-off wave or part of an ongoing cleanup. My suggestion is that if you have engaged in the behaviors mentioned above, reduce higher-risk activity for a while and stay low. Also try not to trigger manual review on your account. For example:

  • Opening new cards, closing cards, downgrading, or upgrading
  • Transferring large amounts of UR points
  • Having a large number of refunds or charge back claims
  • Requesting credit-limit increases, or making large credit-limit decreases or credit-limit reallocations
  • Large purchases, especially buying Visa gift cards, etc.

If you have not engaged in questionable Chase-related behavior and have not bought protein powder, you are probably fine and do not need to worry too much.