Citi & American Express Install New Anti Gift Card Rules
Over the last few days Citi & American Express installed new anti gift card rules. These are rules that are aimed at cracking down “gamers” or points hunters so to speak. One of the easiest ways to amass a large amount of points is increased spending and gift cards are a big part of that recipe. Is that now in trouble for two of the biggest providers?
It appears that credit card companies are getting ready for a gift card crackdown. Is it all smoke and mirrors or is this a legit worry? Let’s take a look at the rule changes and I will share my thoughts on it with you. Please share yours in the comments below as well!
Citi Rule Changes
The Citi rule changes are aimed at the DoubleCash card (for the time being) which is the go to for gift card purchasers in the Citi lineup. Per Doctor of Credit the terms are changing to the following on November 1, 2019:
The following transactions are not purchases and will not earn cash rewards: balance transfers, cash advances, checks that access your Card Account, items returned for credit, disputed or unauthorized purchases, fraudulent transactions, traveler’s checks, foreign currency purchases, money orders, wire transfers (and similar cash-like transactions), lottery tickets and gaming chips (and similar betting transactions), loads or reloads of balances on gift cards or prepaid cards or cash equivalents, person-to-person payments, Citi Flex Loans, the creation of Citi Flex Pays, Card Account fees and charges (such as late fees and finance charges), and fees for services or programs you elect to receive through us.
American Express Changes
Amex has also targeted their most gift card friendly cards in the Blue Business Plus, Gold and Blue Cash Everyday to start out. Per Doctor of Credit the new terms are as follows:
With your Blue Business® Plus Card from American Express, you earn one Membership Rewards® point for each dollar you spend on your Card for eligible purchases. For the first $50,000 in eligible purchases in each calendar year you also earn one additional point (for a total of 2 points)…Eligible purchases do NOT include fees or interest charges, balance transfers, purchases of travelers checks, purchases or reloading of prepaid cards, purchases of gift cards; person-to-person payments or purchases of other cash equivalents. Additional terms and restrictions apply.
Why Are They Making These Changes?
American Express has been trying to cut down on “awards abuse” for a while now. First the eliminated gift cards counting towards welcome offers, then they shut down all points at places like Simon Malls and now these terms. I called American Express the least transparent lender out there for a reason. If they don’t like what you are doing they will clawback points without warning, like they did with self referral bonuses. This is just expanding on what they have already done.
I am a little more confused to see Citi cracking down since they have never cared before. This comes weeks after Citi completely gutted their travel benefits (and others) across their credit card lineup. And to target a card that earns a flat 2% back which means they are making profit on every swipe no matter what you are buying is confusing. There are no bonus categories for this card so what gives? Is this another cost cutting attempt? Are they lining this up for the rumored Citi DoubleCash transfer options?
What This Means In Reality?
I think both companies are building up their defenses. They are putting something into place so that they can break the glass in case of emergency. Do I think they are going to review all data to pull out earnings on all gift cards? Nope! But do I think they can and will use these terms to close accounts or yank back points when they feel someone is taking advantage of them? Yup!
The fact that they don’t specify cash equivalent cards and just say gift cards means that 3rd party gift cards, like Amazon, fall under the terms. Store gift cards are a HUGE business, just see all of the deals we post about them. Because of that I think they would be crazy to go after it. All kinds of people buy 3rd party gift cards…they can’t wrangle all of that. If you are buying them from a legit store I think it will be fine going forward.
Will they crack down on the obvious things like giftcardmall, Simon mall and giftcards.com etc. Yeah I think those will not earn points for purchases in the near future (as some already have). Will similar 3rd party gift card sites like Gyft and mygiftcardplus earn the same fate? That is where I am not sure.
I think grocery store purchases etc. will be fine unless they notice huge volumes or big spikes in spending. They may use these new terms to do a manual review on your account and yank back those points. We will have to wait and see how that plays out.
Final Thoughts
This is a troublesome trend for sure and I hope Chase keeps their nose out of it! But for the time being I think this will only affect obvious VGC and MCGC orders and 3rd party cards will be safe. And if purchase are smaller amounts of VGC etc. then those will probably slip through. I think purchases from obvious vendors like Simon Mall/giftcardmall etc. will be on their radar though and those points will be denied in the near future. My real worry is sites like Gyft that exclusively sell 3rd party gift cards getting lumped into this as well. Only time will tell there though.
Share your thoughts below.
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When trying to make spend to earn the CitiBusiness AA card sign-up bonus, is it still OK to buy a large-value ($500 to $1000) Simon Mall Visa giftcard for that purpose?
Is there a big risk of a clawback if the Simon Mall GC purchase is used to make, say, a quarter of the required spend to get the bonus (a conservative move)?
I haven’t heard of any issues with Citi for Simon Mall purchases.
Any updates on Citibank?
No reports that they have taken any action so far
That language has been on some Amex Apps for a while, at least a year or two.
It has been in there for the welcome offers terms but not in the regular everyday spending terms
I bet at some point in the near future that credit card companies will automatically be able to exclude gift card purchases that were bought at merchants that provide level 3 data. I’m predicting the end of 5X on office supply store gift card purchases within the next year or two since both Office Depot/OfficeMAX and Staples provide level 3 data to the credit card companies.
It will be interesting to see how things changes over the next few years.
If I don’t get points on my Amex Blue Cash Preferred when buying Amazon gift cards while grocery shopping then it’s getting downgraded to the no AF and put in a sock drawer. I understand most of us aren’t a profitable segment of their business, but I do hope they don’t go overboard and enforce this against small denomination gift cards sprinkled in with organic spend.
At some point the pendulum is going to shift too far and they’re going to realize they’re hurting all customers. Perhaps they did this despite losing other customers because they felt it’s more profitable. Time will tell. I personally think as we go into a recession (whenever that comes) they’ll be forced to promote consumer spending and we’ll see banks loosen up a bit.
What you said makes no sense, if you aren’t a profitable segment of their business, why would a recession force them to take you back – you would still be unprofitable.
If they could weed out unprofitable people they’d do it. That’s not my point however.
When a recession hits even the most undisciplined consumers are likely to tighten up. That means less spending and less profit for the banks. They’ll need to incentivize to get people back into using their cards more. I’m saying this in general terms, across all consumer segments.
Many businesses will focus on revenue versus profit. And even unprofitable customers can help cover fixed expenses etc. I do think recessions lead to more incentives offered and less rules overall since they need to drum up more business to cover their costs.
Citi shut down my double cash card about 2 years ago. I was probably spending $5-10k a month on it. There was plenty of normal spending on it as well as gift cards. They also shut down my Simplicity card with it.
I feel the same way. I don’t think American Express will enforce this rule for the most part, but we will see. I have already maxed out two Gold cards and two Everyday Preferred cards’ grocery store bonus categories for 2019, so there will be time to see what happens before the bonus categories reset in 2020. However, I’m not entirely sure how to proceed with two original Blue cash cards, which I have consistently used for 5-10K/monthly grocery store MS. I’m inclined to take the risk and continue with the same spending pattern.
I think most people will continue doing what they have been doing until they see the points not posting.
“purchases of other cash equivalents”, does this mean purchase of miledges of airline, such as Alaska?
Purchasing airline miles shouldn’t be an issue
I think it is going to be the large spenders (maybe $3000 or $5000 and up/month) who will start getting manual reviews. But for the people who are only doing 1 or 2 grand I don’t think it will be an issue.
$3k a month a large spender? These are credit card companies. They don’t care about $10k a month. It’s the people doing $150 k a month that they want to shut down. Even more, the ones doing $20k s day.
If you think the credit card companies do not care about abusers who only charge $10k/month, I suggest you go read the credit card boards. Those people are getting shut down all the time.
I am not sure what the cut off will be but the big spenders will be the easy targets for sure.