Altitude Reserve Shutdown Story
Yesterday I covered some reports that U.S. Bank is proactively shutting down accounts of some new Altitude Reserve cardmembers who are buying gift cards even in low amounts. I also covered some of the quirks and frustrations I have run into using the card. After writing up that report, I had a long time reader reach out to confirm that their account was shutdown.
This reader spent about $8K on the card (about 20% of the overall credit limit) including many normal non-gift card Mobile Wallet purchases. The reader also bought $3K worth of Visa gift cards at a Simon Mall. Apparently the Simon purchase was not through a Mobile Wallet app so it would have only earned 1X points.
When the customer looked in their Mobile Wallet yesterday, the card had disappeared. The reader then called U.S. Bank and was immediately transferred to an “investigator”. This investigator told the reader that the account was shutdown due to buying gift cards because that is a suspicious way to launder money. The investigator specifically mentioned the Simon Mall transaction as being the catalyst.
The reader tried to plead their case but was told there was no appeal. However, the reader was told they could re-apply in 3 to 4 months. This reader isn’t happy since they most likely will not ever see any rewards on their purchases and wanted me to share this story so it could help others avoid the same fate.
Bottom Line: Be VERY CAREFUL when buying gift cards with this credit card and avoid buying gift cards at Simon Malls.
Feel free to share your own shutdown story or perhaps even gift card successes with the Altitude Reserve.
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Have you read cases where this also applied to other US Bank-issued cards like Korean Skypass biz or Club Carson?
I think I will skip this one. The reward is not worth the risk. I have a deep bench of cards to open still.
[…] week I covered the news that U.S. Bank has been shutting down new Altitude Reserve accounts for gift card purchases. One of our readers shared their story about getting shutdown for […]
I saw someone ask why banks even cared if you bought GC with your credit card, since they get the swipe fee anyways. It’s not so much if _you_ do it, the problem is when your card gets stolen, someone uses it to buy a ton of GCs, and then liquefies them (either via money order, or just using the card unregistered). The banks are capped at charging you $50 no matter how much the thieves actually spend, so the bank has to eat that cost. You’d think they could get around this by just requiring ID for GCs, which some stores do, but most of them just go strictly black or white – you can buy them all or you cant buy any of them. Easier for the stores, more of a pain for us.
[…] number of other people also report being shut down due to gift card purchases (1, 2, 3, 4, […]
I had a mild interest in this card, but definitely that has gone to zero. Not worth the trouble. I have more lucrative cards that don’t give this kind of hassle.
I recently got this card and plan to use it primarily for “regular” expenses. It seems like a decent card if you’re a frequent traveler, which I am. But I was going to buy a few gift cards to make sure I spent the $4500 in 3 months to get the sign up bonus. Now I’m not sure what do to about this. I guess I’ll wait a few weeks for the dust to settle. And not stop by a Simon Mall in the meantime. 🙂
Oddly enough, my only purchases are $250 cable bill and 4 x GC at Simon for a total of $2016 last Saturday. I’m done with this for a while but all US Bank accounts are still running strong. Apparently a pattern is being looked for.
What is USB’s risk or loss when their customer buys gift cards? Don’t they get a cut of the purchase price from the merchants? How does buying a few gift cards increase USB’s expense or risk exposure and how is this different from spending the same $ amount to buy merchandise?
Yeah, I find this confusing. Don’t they earn a regular interchange fee at Simon malls? This wasn’t a 3x purchase right? It was just a 1x purchase… So they can’t afford to pay out 1.5% on any transaction any day of the week?
Interesting. I legitimately purchase large amount of gift cards (Amazon and Target) for work and get reimbursed.
Perhaps it is just the obvious Simon/GCM/GC.com that is drawing attention?
You say they’re being PROactive, but aren’t they REacting to transactions unprofitable for them? Proactive would be cancelling accounts because the account holder ran an MS blog, before their first transaction…
I think you can consider it either. I see it as being proactive since they cancelled after just one gift card transaction. They are actively looking for this and proactively trying to stop customers who they foresee doing this. In other words they are proactively cancelling before a pattern emerges. Your point is well taken too. I see it both ways.
I don’t mean to be a pessimist but do you really blame them? They are looking for people who truly want their credit card for long term and use it like a typical consumer. They don’t want people who are using it to buy gift cards for the sole purpose of meeting MS quickly so they can get the points and then use the points and then dump the card. This is not a profitable business for the bank. And no I don’t work for a bank – I’m just a consumer like everyone else. Just sit back and look at it from the banks point of view. They send you a brand new card and within days your racking up gift cards in the 4 digit range. Doesn’t look like you plan on being a long term customer.
Rich easy on the common sense buddy or I’m gonna have to shut your account down!
when you lie down with dogs…… don’t be surprised to wake up with fleas
Well…That was quick!
Just save yourself the aggravation and take your business elsewhere.
They don’t need you and you probably don’t need them either.
What’s funny is that they think they are being so smart discouraging what they perceive as gamers, but they have actually just discouraged everybody and have actually turned what was supposed to be new product launch buzz into negative buzz.
I have a heloc with US Bank and got a formal card offer in the mail today. No way do I plan on doing this. They’re off to a fabulous start (heavy sarcasm). Also side note: I hate US Bank my experience with them has been crappy. Beware.
This is good. MS is really abusive of the credit cards.
So, answer this.
Assume a business owner uses this card to buy 25 of the $50 gc’s for all his employees, would that still be “MS”? He might not even know the term.
If that is not”MS” in your eyes, how do you think US Bank would differentiate?
T&C basically say that card companies own the credit card and they can shut down the account for pretty much any reason.
Not surprised. The short lived Diners Club Carte Blanche card offered 3X points on grocery and drug store purchases. People started funneling thousands and found their accounts shut down.
I wonder if the same will apply to other cards from US Bank.
I have read a few reports of people getting Flexperks getting shut down now too. Not sure how legit they are but that would be bad news!
Any concern about gift cards at Simon malls on club Carlson cards
Just spent 2500. Have never had an issue in the past.
Receiced 3 Carlson card shut down letters in the mail today. Didn’t give explicit reason, but I used them for some MS.
I think this is broader than Altitude
How can buying gift cards be a “money laundering” concern?
I don’t know. I think it is more of them not wanting to pay out rewards, but that is apparently what they said.
In the past, they usually waited at least six months to a year to nerf their rewards cards. This is record setting. They apparently want to make it difficult for people to make the minimum spend for bonus. That will severely dampen desire to get the card for many who are in the target market. Heck, the bonus isn’t even that attractive. This card is going to be a dud for them.
Laundering money on one’s own credit card? That doesn’t even make sense!
Agreed. Money launderers purchase gift cards with cash they earned dealing drugs or through other illicit activity. They also buy diamonds, electronics and collectibles…so are they gonna ban those too?
I think US Bank just created a lawsuit in the making. Buying gift cards is not money laundering!
Lawsuit? Do you really think they can be successfully sued for enforcing their own terms and conditions?
Praytell what part of the terms and conditions are they “enforcing”?
This seems like it was kind of inevitable given USB’s rep, but what is rather concerning is if USB could do this, why couldn’t/doesn’t every other bank just do this as well? Doesn’t seem that hard to stop, apparently. It only took them 10 days.
@Shawn – Any thoughts on if USB is ‘drilling down’ on transaction data to determine if other retail outlet (i.e. grocery stores) receipts contain sales of gift cards? Specifically, if one purchases $100 misc groceries and $504.95 in VGC’s (or even retail gift cards) is raising their ire?
With all the retail gift card deals going on with Mother’s Day offers this week we have been taking advantage of many opportunities to pick up Visa & Mastercard cards as well as standard restaurant and shopping gift cards.
This is outrageous. I just signed up for the checking account and now waiting to sign up for the credit card. After hearing all these stories about cards being shut down, I dont know if I really want to go through the hassle of getting this card.
what’s outrageous? That they aren’t allowing people to game their card?
BINGO!
Buying Simon GCs at 1x is not gaming. And besides..many people have legitimate use for GCs for business or you know…real gifts.
They’re just being assholes on principle, but they’ll end up crashing and burning. Nobody wants that crappy card among regular consumers, especially if any time you make very large purchases you get shut down
U.S. Bank has made it clear this is a personal card and not to be used for business expenses. They would just say you are using it in a way not intended.
I don’t think you understand. YOU aren’t firing THEM.