Prepaid Gift Card Restrictions
In the absence of the possibility to use American Express cards directly in stores (such as Costco, which only accepts Mastercard), many American Express cardholders had fallen back on prepaid gift cards.
These gift cards can be purchased directly in grocery stores or convenience stores… or even reloaded regularly, and are immediately usable.
Here’s the note that’s starting to appear in cardholder statements about the Membership Rewards program:
Effective July 5, 2019, the following changes will apply to the Membership Rewards program terms and conditions: You will not earn points: We’ve clarified that certain transactions (known as ” cash equivalent transactions ” ) do not earn points. We also have the right to deduct points from your points account if we determine that they should not have been awarded. In addition, if we believe that you are intentionally taking steps to obtain points to which you are not entitled, we may consider this to bean abuse of the program.
As such, these new rules have been in force since July 5, 2019, and warn cardholders who would “abuse the program” with the aim of intentionally obtaining points to which they would not be entitled.
American Express now reserves the right to deduct points from the account after the fact.
A new definition has been added for cash equivalent transactions, as follows: the use of your card account to obtain or send cash or something that converts easily to cash. Examples include: purchases of foreign currency, gift cards (purchasing and reloading), traveller’s cheques, money orders, bank drafts, casino gaming chips, wire transfers and all similar transactions. It also includes balance transfers, cash advances, person-to-person payments and the use of credit card cheques and other similar means or offers, offered by us or through a third party.
Prepaid gift cards of the Vanilla type are clearly targeted: American Express refers to these means of payment as “easily convertible to cash”.
Warnings, financial review and Amexile
In 2020, American Express closed suspicious accounts in several waves after issuing the aforementioned warnings. Indeed, customers who appeared to be abusing the points system in the eyes of American Express suddenly had all their credit card accounts blocked, and all non-transferred points were immediately lost (Privilege Points, Aeroplan Points, Marriott Bonvoy Points). These events are known as Amexile.
What’s more, the spouses of the people who were amexiled were also expelled from the American Express customer base.
In 2023, there was a lot of feedback from people who had undergone financial reviews. Others instead received warning letters from American Express about their spending habits.