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Via Doctor of Credit American Express has updated credit card application terms for their Delta card with a warning to customers who would just sign for a card, pocket the bonus, and cancel.
Here’s the new language:
If we in our sole discretion determine that you have engaged in abuse, misuse, or gaming in connection with the welcome bonus offer in any way or that you intend to do so (for example, if you applied for one or more cards to obtain a welcome bonus offer(s) that we did not intend for you; if you cancel or downgrade your account within 12 months after acquiring it; or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit bonus miles to your account. We may also cancel this Card account and other Card accounts you may have with us.
American Express Centurion Lounge Dallas
Here are the things they are flagging as problematic:
- Applying for an offer not intended for you. If you pull up a card with your own web browser and are offered a bonus that seems fine, but if there’s a special link with a promotion embedded they reserve the right to claw back the bonus although it’s not clear that they’ll do so.
- Cancelling a card or downgrading it in under 12 months. Many banks have long said they could claw back a bonus if you cancelled a card too quickly, there were urban legends of Chase doing this on cards cancelled within 6 months way back a decade ago. If you keep the card a full year though, you’re not on the hook for an annual fee the second year, there’s nothing here that takes away a cardmember’s right to evaluate whether a card product will make sense to keep on an ongoing basis.
- Returning purchases used to meet the spend threshold for a bonus this is something that in practice American Express and Chase have already frowned on. Don’t buy something, like a refundable airline ticket, get the card signup bonus and refund the ticket. That’s already a risky practice.
American Express generally already limits you to one bonus per card product. And their terms and conditions already say that buying gift cards and making person-to-person payments don’t count as spending towards earning a bonus, even if that’s enforced only sporadically.
So far these terms don’t appear to have been added to other card products beyond Delta. And in practice it’s likely that nothing is new or different.
However it underscores that American Express is paying attention to their costs as they invest heavily in their products. They’re happy to spend significantly to acquire customers, but want to limit the number of unprofitable customers they’re bringing in at the same time.
Ultimately there are many strong American Express card products but in most cases their strength doesn’t come from the signup bonus anyway. These restrictions on earning bonuses isn’t new. And American Express keeps introducing new strong products such that the once in a lifetime limit is only inconvenient to some.
I read this change in terms as laying the groundwork more than anything else, covering themselves for actions they may choose to take against a customer that’s acting egregiously (in their view) rather than the median member who cancels a card after 11 months rather than waiting a year. They don’t want to be poorly-positioned responding to the inevitable CFPB complaint that comes.