Today is one of the darkest days for the manufactured spending (MS) world. Pretty much every major forum is full of complaints, as a huge number of people with Serve and Bluebird accounts received emails saying their accounts had been restricted. They can no longer keep loading funds with Visa gift cards or via online load.
It may look like this is just the death of yet another MS product, like Amazon Payments or Vanilla Reload, but its impact is so large because this type of MS method was the easiest to learn and carried the least risk, so it had the widest user base. No matter what, this round of shutdowns really does mark the end of an era.
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Update (Updated 2016.8.25)
Facts update:
- [2016.8.25] A few days before my Serve was shut down in April, I opened a Bluebird. Since I had not activated it yet, it escaped the previous shutdown wave. This time it was shut down too, and it seems this was another large-scale wave. Looks like there may be no survivors left~
- [2016.4.12] My tough little Serve survived three rounds of shutdowns, but today it finally got the email too. Are there still any birds left alive? It looks like AMEX is doing these shutdown waves more and more frequently.
- [2016.3.29] Received the death email.
- [2016.3.28] Another wave hit newly opened Serve accounts, and this time there was no email warning. You can try a Walmart load or test online load to see whether your account was affected. (The blog author's LD's Serve was also restricted on 3.28; that account had been reopened immediately after being shut down on 3.4.) More importantly, this time reopening is no longer possible. Looks like it is finally time to say goodbye to Serve for good~ R.I.P.
- [2016.3.4] On Friday, loading was also restricted for the small number of remaining Serve and Bluebird users. There were still a few survivors left.
- No one was shut down in February.
- [2016.1.8] On Friday, loading was restricted for a very large group of Serve and Bluebird users. After shutdown, they could not open a new card.
My updated guesses:
- Now once you get shut down, your SSN will also be restricted, and you will not be able to open a new card.
- The only factor that seems to reliably matter in determining whether an account gets shut down is when the Serve/Bluebird account was opened.
- Keeping a daily balance, not doing online load, doing only online load, or having some normal spending still does not guarantee that you will avoid shutdown.
- So my suggestion is: if you can still load, do it sooner rather than later. There may be nothing special you need to watch out for; when your shutdown time comes, it comes.
- The shutdowns may happen on the first Friday of every other month, so try to get things done near the beginning of each month.
Please leave a comment and share your experience. Ideally, use the following format:
- Whether you were shut down
- When you opened your Serve/Bluebird account
- Your approximate monthly load and Bill Pay amounts if you were not shut down
The Bird Cards (Serve, Bluebird, Redcard) and Manufactured Spending (MS)
From the earliest Bluebird to the later One VIP Serve, their role in MS was basically the same. The cycle generally looked like this:
- Use a credit card to buy "bird food" that can be loaded onto these bird cards, such as Visa gift cards or Vanilla Reload, in order to meet minimum spending requirements or earn high rewards in a certain category
- Use various methods to feed that bird food into the bird cards
- Use the bird cards to pay bills that normally cannot be paid directly with a credit card, such as credit card bills
Because the denominations of this bird food were usually fairly large ($200-$500), hitting minimum spending requirements was very easy. And the cost of buying the bird food (the VGC activation fee) was also low, usually around 1%-3%, so if you were earning 4.5x or 5% cash back in a category, you could still come out ahead. And just as importantly, all of these bird cards came from AMEX and had historically been quite tolerant. No one had ever been shut down just for running $5,000 a month through them. So everyone started raising birds.
The Life of the Bird Cards
Looking back at their history, you can roughly divide it into the following eras:
- The Bluebird + Vanilla Reload era
- The Serve era of fee-free credit card loads at CVS
- The soft Serve era of online credit card loads
- The Redbird era of fee-free credit card loads at Target
- The three-way era of Redbird, Serve, and Bluebird
- The post-Redbird era, with Serve and Bluebird half-dead
In the earliest Vanilla Reload era, people could buy low-fee Vanilla Reload packs at drugstores like CVS, load them directly into Bluebird online, and then use bill pay to pay credit card bills. As Vanilla Reload gradually became cash-only, that route became much harder to use.
Later, Serve burst onto the scene. At first, it could actually be loaded at CVS with no fee, so everyone jumped in and switched to Serve. Of course, that path only lasted a few months. After that, AMEX came up with another twist: soft Serve, which could be loaded online directly with a credit card, up to 1,500 per month. That reduced costs even more, and people could meet spending requirements from home without even going out. Naturally, the ending was the same: soft Serve gradually got left behind by the times and could no longer be applied for.
Before that point, all of these bird cards had something to do with Walmart, because they could all be loaded at Walmart using Visa gift cards. So despite all the changes, some people kept holding on to their favorite bird cards. Then one day AMEX launched a Target-related Redcard. Not only did it offer 5% off at Target, it could also be loaded at Target directly with a credit card for no fee, up to $2,500 per day! Compared with the environment at Walmart and Target, many people switched over to Redbird. And because you could load directly with a credit card, skipping the Visa gift card step entirely, a lot of beginners flooded in as well.
A few months later, the secret was out. Target no longer allowed direct credit card loads, but Visa gift cards still worked. That brought us into the three-way era of Serve, Bluebird, and Redbird.
But good times never last. Target and AMEX joined forces and cut off the debit load path. Redbird officially died. And now, AMEX has sent out another batch of emails restricting the loading functions of many Bluebird and Serve accounts. Even the survivors who did not receive an email are on edge, wondering when their turn will come.
Why the Bird Cards Died, and Who Survived
In the article credit card risk control, we discussed why credit cards get shut down. The bird cards died for similar reasons. In the end, it comes down to one sentence:
- You were not using the product the way the bank wanted you to use it.
Of course, that is only the broadest possible summary. AMEX almost certainly has an algorithm that determines which users get restricted and which do not. There has been a lot of online discussion about this, and there are probably multiple contributing factors, such as:
- Loading close to or the full 5,000 per month with Visa gift cards
- Doing close to or the full 1,000 per month via online load
- Using all of the funds only for bill pay, with no normal spending
- Loading funds and then immediately using bill pay
- Continuing the above behavior for several months or even years
My guess is that anyone who got restricted met at least one of those criteria. The reason to analyze why the bird cards died is that there was still a group of survivors. What traits did they have? Based on examples I have seen, here are some possible characteristics of the survivors:
- They had just received the card and had barely used it
- They had some normal spending mixed in
- They did not immediately use bill pay after loading funds, and instead maintained some average daily balance
- They had some subaccounts and some normal spending as well
Putting together the traits of restricted users and survivors, I think AMEX's algorithm may include these three key factors:
- Average daily balance
- The ratio of normal spending to Bill Pay
- Total Bill Pay and load volume
So if you are still a survivor, try to maintain the first two if possible. As for the last one, my feeling is that if you keep the account open long enough, eventually your turn will come.
How to Respond
At this point there are three kinds of people dealing with the bird cards: those who have already been restricted, those who survived, and those who still want to open one.
If you have already been restricted
First, the AMEX email says that you need to close the account after using up the remaining balance. Here are a few things I think are worth noting:
- If you still have money in the account and you often make money from AMEX Offer, then keeping the funds there may not be a bad idea. One last round of rewards harvesting.
- If you still have money in the account but do not want to keep playing and plan to bill pay it out, it is best to wait until the bank receives the bill pay before closing the account, just in case something goes wrong.
- If there is no money left in the account and you do not want to add money through other methods just to use AMEX Offer, then go ahead and close it. If you are interested, you can try reopening a new account right away and use it more carefully based on the survivor traits above. I have seen cases on various forums where people closed and then could not reopen, but I have also seen successful reopenings. So if you still want to play, you might as well take one more shot.
If you are still a survivor, or still want to open one
Based on the three factors I mentioned above, if you want to keep this account alive, here are a few things you can try:
- Load less for now, especially Bill Pay, and let things cool down
- After each load, let the money sit for a while instead of immediately using bill pay
- Use AMEX Offer more often and add some small normal purchases
- To avoid increasing your total Bill Pay and load volume too much, you could choose to proactively close the account after a few months and then open a new one
Summary
Just like the ancestor of MS, buying unlimited coins with credit cards, all good things eventually come to an end. No need to worry too much though—life goes on~