New Wave of Amex Shutdowns

American Express has been heavy handed with shutdowns in the last two years or so. By now most readers probably know that you need to do almost everything by the book when it comes to American Express credit cards. Even then, if it seems too good to be true, then you are probably risking it. Now we are seeing anew wave of shutdowns from American Express with many people receiving notifications in the last few hours.

Shutdowns Related to PayPal Key

If you’re not aware of PayPal Key, it is a relatively new service that PayPal launched to make it easier to make payments online. You make these payments through a virtual Mastercard debit card number provided by PayPal, but that it’s actually funded by your PayPal balance or a credit card. And the latter made this a good option for some payments where debit cards get charged a lower fee. It also let you pay with an American Express card where Amex wasn’t an option.

PayPal Key payments funded with a credit card have already been blocked at Plastiq. American Express had already limited the use of credit card through Plastiq way before that. You can not use Amex cards for mortgages, student loans, car payments and several other types of payments for example.

So getting around those rules with PayPal Key was clearly an issue. But there were also other uses for PayPal Key such as paying tax bills, loans, and even some credit card accounts. Once people starting paying tens of thousands of dollars through it, and earning big rewards in the process, American Express noticed. Seems like several data points show that PayPal Key could have been the culprit in these recent shutdowns but it was also often coupled with the extremely popular 3X referral offers. You can no longer get the extra 3X earning through referrals, but people that have referred recently are still earning an extra 3X on all purchases. It seemed like a ‘too good to be true’ kind of thing, so doing anything shady was clearly a big risk if you value your American Express relationship.

Check Your Emails

People that have been shut down by American Express today have received automated emails informing them that all their accounts have been closed and they are no longer a customer. That effectively ends your relationship with American Express. The email states that the accounts were not complying with offer terms.

Take a look at your emails and also check your accounts to see if you are able to log in and if your balances are intact.

Guru’s Wrap-up

This is another reminder that American Express is very strict when it comes to enforcing the rules. Just using American Express through PayPal Key once or twice will probably not be an issue. But when Amex cards are used through it to make payments that American Express wouldn’t let you make otherwise, then it becomes an issue. Even more so if you are earning an extra 3X in Membership Rewards points on those purchases.

If you have large points balances and lots of American Express credit cards it’s a good idea to tread lightly even when Amex through these amazing promotions at you.

Let me know if you were affected by this latest wave of shutdowns.