American Express Problem...Will they cancel me?

Here’s a quick background:

I’ve been with AMEX since 2003, never missed a payment, never late, always paid in full and have been a Platinum Card member having accumulated over 150,000 points to date. A very good and loyal customer.

In the past couple months, I thought of an idea to accumulate more rewards points than my typical monthly spending would allow. Using my personal paypal account to send payments to my business paypal account, I was able to use my AMEX to essentially fund “cash”. I would then withdraw the cash to my bank account to eventually contribute to paying the monthly AMEX bill. There was never any attempt of fraud or unscrupulous activity, just merely accumulate more points, faster. Keep in mind I have done this for a few months and as mentioned above, always paid my bill in full and never late. Perfect.

Well today I received a call from AMEX stating that my account had been suspended, and aftering asking some questions regarding my employment, address, and salary, it lead to the inevitable question of why I was sending paypal payments to an account of the same name (my name). I explained the aforementioned story and was told that “Unfortunately, your actions violate the cardmember’s agreement will be reviewed for account cancellation”. Horrified, I explained my ignorance to such terms of the agreement (who reads that fine print crap anyway?) and vowed to discontinue my practice and go about my normal spending. Apparently the reason it’s such a big deal is due to the fact that my actions were deemed as using my AMEX to acquire cash and apparently severely against their rules.

Despite my plea for completely being unaware and noting my excellent 4+ year history of flawless financial responsibility with them, it appears that they will review my case and very likely contact me within 7-10 days to formally permanently cancel my account, just like that. My ignorance is no excuse, but c’mon this is ridiculous. I need not mention that I have to pay paypal fees and the idea of acquiring cash doesn’t even make sense.

Any dopers with similar experience/advice in the matter? It would be quite a shame to dissolve a relationship with a company whose card I used exclusively and loyally for so many years.

Did you really think Amex would find your blatant attempt to skirt the limits of their points system to be acceptable? It is fraud, despite your protestation to the contrary. Whether or not they will cancel your account is answerable by no one but the people reviewing your account, but they are clearly well within their right to do so.

AMEX makes money off the merchants whenver a card is used. Usually this is around 3%. Their rewards system is in place to encourage additional spending and ensure customer loyalty. MORE YOU SPEND, MORE MONEY THEY MAKE, the diminutive points-value reards system is a tiny marketing expense they willingly incur.

My “infraction” according to them has nothing to do with points, but instead concerning only the fact that I acquired “cash” from my card instead of a regular purchase. I am not debating whether this good or bad. I explained to them I was unaware and have no problem discontinuing such practice. Just looking for any knowledge and advice to not be canceled over this matter.

What made you think you were the first person to try this. I do something similar with one of my cards, but I use it to buy parts for a job and pay it back when the customers payment is recieved, usually within 5-7 days. Considering that it can easily mean about $1000-2000/mo in points, they come pretty fast and furious.

Wanna play points games, pay your bills and then pay AMEX off.

Also, please remember anti-money laundering laws have gotten much stricter. Financial institutions are supposed to flag any unusual type of activity.

Since it costs AMEX money to redeem those points, is it surprising that they consider this sort of thing unscrupulous and fradulent? Or that their cardmember agreement prohibits this? Or that they tend to be reasonably savvy about such matters?

I suggest you throw yourself on their mercy, and include an offer to give up all the points you “earned” by this scheme.

Just out of curiosity, if you sent (say) $100 by paypal to your other account, how much arrived? If they took a 2% cut, wouldn’t the points you earned on that transaction not be worth it?

I don’t even think people bother to read what I have written before they reply. AMEX could care less about the points, they’re simply not happy that the card was used to get cash but not through their traditional cash advance method and 26% APR. The points are irrelevant as it was not mentioned, as I have mentioned several times already.

I have plenty of cash flow to afford the paypal fees, payments were never an issue, neither was money.

Just because the points weren’t mentioned specifically doesn’t mean they are irrelevant. But, in either case, you’re getting something for less than the cost outlined in the Cardholder Agreement. It’s still fraud. All your semantic contortions to the contrary won’t help you.

I still cannot discern how this was a rational action to take on your end in the first place? You have, “plenty of cashflow to afford the PayPal fees?”

What? You’re still 2% poorer for this runaround regardless, aren’t you? Certainly the meager value of the Amex points will not match this percentage, will it?

I was under the impression that this was a violation of PayPal policy as well, sending money to yourself with your own credit card. I can’t find it in a quick search of their site, but I tried to do this once and the transaction was blocked.*

Secondly, I think that most if not all credit card companies explicitly prohibit using your own card to make charges to an account which you control. My google fu isn’t all that great, but I suspect this may also be illegal, under either the Patriot Act or any of the federal anti-money laundering acts.

  • (FWIW, I did this accidentally by entering my own email address instead of the person I was trying to send money to… One of many negative consequences of making impulse purchases late at night)

My dad got his card revoked for doing something somewhat simailar. We had a small emergency at work and needed some money FAST. He was about to write himself a cash advace check for $5000 when I came up with, what I thought was, a great idea. Instead of paying the cash advance APR on the 5K, just run the amex for $5k at our credit card machine and take the cash. Easy as that. A week later his card stopped working and he received a similar letter. He told them that he takes groceries for home and every few months he pays for them (okay, so that wasn’t true, but there’s no reason why it couldn’t be). Well, they asked for three years worth of personal tax returns as well as three years worth of business tax returns AND finacial statements. We faxed over a HUGE stack of papers, plus let our CPA do some of the talking and they still pulled the card.
So yes, they very well may cancel you, but they also might not. Does that help?

Do you really need an AMEX card that badly? I cancelled mine 10 years ago and don’t miss it. I’m sure many other card issuers would be glad to sign you up. AMEX isn’t accepted many places around my town anyway, but VISA and MC are.

My thought as well.

And now you see what “loyalty” AMEX has towards you.

I’m not saying you were in the right according to their service agreement, but hey, screw 'em.

Those are my thoughts too.
It’s just a credit card. There is no “shame” in dissolving the relationship.

Just sign up for another card, and forget about it.

I am sorry to ask for clarification instead of providing help, but I have read this whole thread thus far, and I understand all the responses, but I can’t quite match up the responses with what the OP is saying.

When I boil out these statements, the OP effectively contradicts himself: “I did this is to get cash–it wouldn’t make sense to do this to get cash.” So did you do this to get cash? Or not? Or what? (The fact that your motivation may have been to accelerate points and AmEx didn’t mention the points in their complaint appears to be irrelevant.)

Also, I have a PayPal account but I am at a loss to understand how one moves money from one PayPal account to another but an AmEx card gets in the middle of this somehow. How does a PayPal-to-PayPal transaction involve a credit card?

Because he didn’t move money from one pay pal account to another… he used one paypal account to make a credit charge card to the other.

Heres some clarification. Lets assume I only spend ~$5k per month in Amex charges. In order to spend more to accumulate points as I am near a milestone, I used my card to fund paypal payments to myself. The funds acquired in my recepient paypal account were eventually EFTed to my checking, less any purchases I happened to make. The funds from the checking account would eventually contribute to paying the amex bill.

My intentions were to get more points without buying more ($5k is a lot for normal monthly purchases). Keep in mind that I lose 2% on the acquired funds when using paypal and I assumed Amex was making their 3% merchant fee so it was just like any other purchase. If anti anyone lost money, it was me but I was fine with that.

I had performed these transactions at least six times and always paid on time and in full. Amex did not inform me of my “violation” until 3 months and several transactions later. So now I am under review for cancellation but I hope for the slim chance of a warning. I was honest and sincere when explaining myself and told them I could and would easily stop the practice. But if they are willing to lose a potentially lifelong customer with perfect payment history and credit score then someone recommend me a good Visa with a good rewards/skymiles program.

if I violated the Patriot Act also with my actions, ship me to Guantanamo Bay with the terrorists, surely deserve it.

For some slightly off topic insight into this, they probably don’t even begin to consider you a valuable customer if this is the case. They would much prefer a person that misses an occasional payment and carries a large monthly balance than pays off their balance every month in an exemplary manner. Credit card companies actually compete most vigorously for the “worst” customers up to a point.

Here’s some more background on the workings of major credit card firms, particularly, “A Closer Look at the Industry’s Best Customers”

Again, given that you lost 2% to the bastards just for some points, I’d have to guess that you still got screwed. Would you be able to explain again with some examples of their largess as to why this was a good idea?

Finally, as others have said, they obviously have no emotional loyalty towards you, and not having an AMEX card likely won’t be one of the larger regrets in your life.