They confiscated 201,780 points — can you help me get them back?


Question: I recently applied and received a co-branded credit card from Chase and AARP. The card had in introductory offer of 5 percent for the first six months of card usage. I used the card and earned 201,780 points. Every single charge was legitimate and I have receipts. Furthermore, every single charge was authorized by Chase.

This week, I logged into my online account to find my account was closed and I would not be getting the points accrued the last fiscal month of activity. I called Chase and they told me because the card was not “used as intended” they had closed my account.

I have a personal checking account and a business account with Chase. My Chase bank manager tried to help and hit a brick wall, figuratively speaking. I also asked AARP to help me, but they haven’t been able to do anything either.
I believe Chase closed the account so they would not have to pay 201,000 points, which are worth about $2,000. I am consider taking this to court. Can you help me? — Robert Weisberg, Deerfield Beach, Fla.

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Answer: Affinity cards like the one you used are a popular way to earn miles and points quickly. But you have to read the details before you take advantage of an offer: there’s lot of fine print that can foil your efforts.

One of the standard program rules that most cardholders aren’t aware of is that the points don’t belong to you, strictly speaking. They’re the property of the company issuing the card. Also, the contract says they can change the rules whenever they want to and for whatever reason.

When it comes to affinity cards, a bank will pay a travel company a penny or less per mile but will get a dollar or more of your purchase in exchange. That benefits the card issuer and to a lesser extent, you. But when you figure out a way to game the system — which it looks as if you did — then the company can simply pull the plug on your point-collecting efforts.

It shouldn’t be allowed to do that. But one reason the courts have been so reluctant to step in and tell a credit card company that it can’t, is that these programs are so complicated, only a select few experts can make sense of them. So, while you may have been able to sue Chase and AARP, it wouldn’t have set any precedents. You’d just be another cardholder who played the game and lost and persuaded a court to intervene.

Personally, I think these affinity cards are dangerous because of the way they influence your spending. I mean, would you have otherwise made enough purchases on your personal or business account to accumulate 201,780 points? You may have benefitted from that, but Chase and AARP probably benefited more.

I contacted Chase on your behalf. It declined to comment on your case, but contacted you cut you a check for $2,400, the approximate value of the points you lost.

Update: Since many of you have asked about the circumstances surrounding the suspension of Weisberg’s card, I’ve decided to publish a copy of the letter from AARP that explains Chase’s decision:

Your recent e-mail to the Association was forwarded to this office for response. The function of this department is to work as a liaison between our members and our providers. AARP Services, the wholly-owned subsidiary of AARP, is aware of the account closures, but due to federal privacy regulations we do not have access to the details surrounding the closures.

Chase has informed AARP Services that its closing of these accounts is within the guidelines of the AARP Rewards Program Rules and Regulations and the Card Member Agreement. Chase believes that its action therefore is valid.

These guidelines include but are not limited to the following:

• Ability to Earn and/or Redeem Rewards Earning Restrictions
• Program Restrictions
• Right to Change/Modify/Cancel

If you would like a more detailed explanation of the action taken on your account, please contact: Chase Lending Department at 1- 800-219-0015 These calls will now be routed directly to an advisor that deals with these types of accounts.

With all AARP programs, the AARP Board periodically reviews and re-examines the provider offering the service under the program. Generally speaking, there is only one provider per program at any given time. At this point in time, Chase is the provider that the board has selected to provide the AARP Credit Card.

When AARP establishes a relationship with a provider such as Chase, we work very hard to ensure that we are getting the best value for our members and that we are working with a reputable organization. We take seriously our commitment to the membership and make every effort to offer programs that will provide excellent service to our members while meeting their needs. Thank you for taking the time to inform us of your experience and for your membership with AARP.

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116 thoughts on “They confiscated 201,780 points — can you help me get them back?

  1. I’m not sure Chris is being fair to the OP. How did he game the system? Strange that Chris accuses him of doing so without a single line of explanation about what exactly he did that was improper. And if he was doing something wrong, why did Chase so quickly settle for the full amount?

    1. Yea, I think I’d need to know exactly what he did. Generally, cash advances and gift card purchases are exempted from earning points. Otherwise, people would come up with a scheme to churn-over huge amounts of money and earn literally millions of points.

      1. reminds me of the US Mint $ coins trick used in Flyertalk. 200K point is a lot of points to rack up in a short time.

        1. For those who don’t recall, the reference is probably to the US Mint’s program (the Direct Ship program) to attempt to get dollar coins in circulation when banks weren’t otherwise in a hurry to stock these coins. They would allow people to purchase dollar coins from the US Mint website at a 1:1 ratio with free shipping. So what would happen is that people would use their affinity credit cards to buy lots of these coins. When the coins were received, the buyers would then just deposit them in their bank accounts so they could pay off the credit card bills. I read of cases where someone directed the shipments to his bank to pay off a mortgage, and there was one person who bought about $2.5 million worth of these coins. The result was that they could get points/miles/cash back from their credit cards essentially for no cost because they were essentially buying cash with their credit cards at a 1:1 ratio and it technically wasn’t a cash advance.

          The US Mint was losing money on these transactions and were issuing a lot more than they would have for those legitimately buying the coins to put them in circulation. They eventually put limits on the amount of coins one could obtain per month through this program, and currently one actually pays a premium, although they do allow the buyer to specify the particular coin design.

          1. Don’t you wish the OP just told us what the heck he did to get 200K points in a few months. BTW Chase/AARP changed the 5% cashback quite a while ago so this must be an old case.

          2. This was last year. The article appeared now but I think there may be issues with other programs. Citibank right now has a similar situation. Up until The Chase problem I never knew of anything that large.

          3. Can you please tell us what you know about how one can theoretically run up such a high 5% cash back in about 5 months. I am all ears 🙂

    2. I have done a similar thing with an Amex card and interestingly, was encouraged by Amex to do so! I needed new computers and a number of other furniture and equipment items for my business and called to be sure the purchases of $10,000 to $15,000 at a time would go through and was told no problem, please use the card and remember that we provide an extra year of warranty beyond the manufacturer’s warranty as a benefit of this card! I paid my bill online two, sometimes three times a month, because I was not comfortable with a large outstanding balance but it was convenient and beneficial to me!
      I think Chase expected that an AARP member was old (over 50 is old??) and did not expect anyone to actually rack up the points. And then made the mistake to think that he would just accept the answer.
      Most of the “deals” I have seen say no gift cards, no cash equivalents, no this, that, or whatever, but as long as you fit the description, it works. Wouldn’t it be a scam on Chase’s part if no one ever did well and Chase was always the one who made out in the deal??

      1. The article mentions the OP also having a business account, so I’m guessing he did something similar to you. If his activities were allowable by Chase’s terms they owed him the points. Period.

    3. Chris doesn’t like loyalty programs, period, and his knowledge is limited. I don’t think he’s really interested in the case much on its merits, but as a warning to people to steer away from them.

      1. While it is possible to come out ahead through the use of co-branded or private label rewards/affinity/loyalty cards, it requires an unusual amount of discipline on the part of the card holder. And that discipline is frequently thwarted by data mining, marketing, and other ‘incentives’ to increase your spend.

        Heck, even the act of using a card instead of cash has been shown to increase the average transaction by more than 10% in most cases. So if you’re willing to spend 10% more cash (which can be used anywhere) to get 5% back in rewards points (that can only be used in a limited setting), then I’m sure the bank will extend to you as much credit as you are able to bear.

        1. “Heck, even the act of using a card instead of cash has been shown to increase the average transaction by more than 10% in most cases.”

          Are you saying that you get charged 10% more when use a credit card vs cash when purchasing? I’m not really sure what you are saying with the 10% increase. The only way it could cost you more is if the merchant puts a surcharge on the use of the credit card. Not sure about other states, but that is illegal in California.

          1. I think what Josh was saying is that individuals spend more using credit cards just because they don’t think of it as “money” the same way they do cash. Similarly as to why casino use chips. And while in many states it is illegal to put a surcharge for credit card use, those same states allow a discount for cash. Somehow that’s different.

          2. I have heard things like that, people spending more when using credit cards vs cash. Just the wording was confusing.

            And speaking of confusing wording, I know what you mean about the discount for cash is acceptable but surcharges are not. The way I look at it is the merchant must advertise the highest price so you can compare prices. If the merchant wants to charge a lower because you use cash, that is fine. You are not paying over the advertised price. Kind of like the DOT rule on advertising fares. Kind of like, not exactly like.

          3. There are many merchants that break merchant rules however they are not enforced always. Having a minimum purchase for a charge is a violation of merchant rules for example. A discount for cash is allowed and acceptable. Charging extra for charge is not allowed and that could be enforced with a merchant. Even asking for a drivers license ID is against merchant agreements and this is never enforced. If you even buy a $20.00 item in Vegas most of the time they ask for ID.

          4. Why? Why should I thank them for checking? What does checking really do? Protect me? Hell no. I already have protection in that I am only liable for $50 of fraudulent charges. And most issuers even waive that. And most of the clerks I have dealt with wouldn’t spot a phony ID even if it was printed right on it. I have my DL in a windowed flap of my wallet. Just for fun, I printed up an overlay for my license. What it did was put the word “Kalifornia” over “California”. I showed that to several places that asked for ID and guess what. NOT A SINGLE ONE OF THEM CAUGHT IT! Now tell me again, what good is requiring an ID? And why is it that merchants expect us to uphold our end of the agreement to use the card but merchants don’t feel they have to uphold their end to accept them? And you do realize, if you get enough complaints about requiring the ID, they can pull your ability to accept the cards.

          5. I show mine each and every time. I own a business and get it! If you say no to me as a merchant, you can walk out without your item. No problem with me!

          6. Yeah. We went through this with you in the past. Your business require ID for other reasons, even if paying cash, if I remember right.


            “So credit card companies have a strong incentive to encourage their customers to spend more money using credit cards. They succeed. A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash. And McDonald’s found that the average transaction rose from $4.50 to $7.00 when customers used plastic instead of cash.”

            It’s not that you get charged more–it’s that you buy more or spend more. Using plastic hinders your ability to judge what you’ve spent.

            There’s another study where they asked people leaving the grocery store how much they spent. The people who paid cash were very accurate–often down to the penny. The people who paid with plastic were much less accurate–typically underestimating how much they spent by 10-20%.

            So yeah, if you use a credit card, you’re spending more than you think.

          8. In school I am not afraid to say that I was bored to tears about economics and economic theories. However personal finance is a skill that I know well. Anyone that knows me well, knows I get the best deals. I always comment the only worse than a bad deal is when the person thinks they are getting a good deal and they are taken advantage of. I personally know who to maximize these programs to the advantage of any consumer. I pay no more for anything I buy and I don’t buy more. Anyone that wants to pay cash for everything, go right ahead. All that other stuff online is noise. Articles about credit get the major hits and make money for these websites. The problem is the information is mostly useless or just not true. I know every cent I pay for everything. FYI Dun and Bradstreet. Really? They call me all the time to ask questions about my business. If I told them I employed 100 people, they would put that in their file. Those pollsters never talk to me. I think many people are suckers.

          9. “FYI Dun and Bradstre et. Really? They call me all the time to ask questions about my business.”

            And you can back up this extreme claim, right? I was willing to accept what you were saying until this claim.

          10. I can back it up as I have been in business for 30 yrs. They were big in the 80s I think. If you think highly of them great. And yes I get calls from them a few times a year usually. How do you think they get a lot of info. if you are not in business you are not aware of this. They will even ask you for private financial statements. I don’t know a single company I do business with (many huge companies) who use D&B in relation to my dealings with them. Furthermore I have never known them to be involved with consumer data as mentioned.

          11. Oh. I know who D&B is. In a previous job, I had to work with them. You on the other hand, I know nothing about. You’re making these grandiose claims, yet not providing anything to back up those claims.

          12. As I said, I know all about D&B. But again, you deflect providing the proof of who your claims about yourself and just deflect by bringing up irrelevant information.

          13. You’ve “backed up” absolutely nothing regarding yourself, which is why I as well as EdB question your veracity.

          14. Things got way off topic here. The bottom line if I can be clearer is that I contacted Christopher last year because I knew he covered these topics and was close to the flyertalk community. Maybe I should not have answered here to explain some things. Chase paid me what I was owed. Do you think they would just do this if they were in fact correct about the issue. It just comes down to the simple fact that a small subset of customers generates huge volumes of points,. You can believe whatever you want. If you research this particular issue you will find this is not limited to my problem. With this specific product.

          15. One more thing I can back up everything I say. One more thing is if you run a business you get a letter that other companies are asking about your D&B info and would you like to subscribe to their services and also give them your company information. If you are a “new” company they tell you that you should subscribe to their services so you can obtain a D&B number.

        2. That doesn’t make sense and does not apply here. If you are buying groceries for example does charging make you buy more? Maybe if you have no discipline. If you want to buy a MacBook Air, doesn’t it cost 5% or 10% more if you charge it rather than paying cash? I can say that the reason they want you to charge gas and restaurants is the hope that you will carry a balance at a high interest rate.

          1. “If you are buying groceries for example does charging make you buy more? Maybe if you have no discipline.”
            Even if you think you have discipline, studies suggest that the vast majority of people spend more than they otherwise would, and spend more than they think they have spent. So, for the vast majority of people, using a credit card instead of cash is detrimental.

            Typically, if you want to buy a MacBook Air, it costs the same whether you buy it in cash or on plastic. (But you might be more likely to add the extra carrying case if you’re paying in plastic, or to get AppleCare, or whatever other thing, thus inflating the total spent.)

            Of course the reason they want you to charge [everything] is in hopes that you will carry a balance and have to pay interest. That’s how they make money. “Points” are their way to incentivize customers into using the card, by ‘tricking’ them into thinking they’re “getting something back” or getting a discount. It’s purely manipulation of the human psychology, and it works amazingly well.

  2. So, what WAS he buying? He seems to dance around the question of what his activity was. OF COURSE all the transactions went through; that’s not in dispute. Instead, he may have done something like the now-closed “US Mint” loophole where people ordered thousands of dollars in coins from the mint (collecting their purchase points) and then dropped the coins off at the bank to pay off the bill. Rinse, repeat. Alternatively, I believe there are some states where gift cards can be redeemed for cash under certain conditions. All valid transactions, all simply schemes to extract maximum rewards out of the bank while not actually buying anything or spending any actual money.

    1. I didn’t buy any mint coins or any such things. That is for others not me. No gift cards either. I did not write the article, however if you want to assume Chase is right go right ahead.

  3. This one has me puzzled. Exactly what is meant by “used as intended”? Are there restrictions on what the OP was allowed to charge to this card? Did he go over the limit on the card? Was he buying things for friends and having them pay him cash? Without more details it is difficult to understand why the account was closed.

    I can still answer the question: Of course the bank and related companies benefit more in general from these type of cards. They would not issue them otherwise.

  4. It seems as if there are blanks yet to be filled in here. What, specifically, did the cardholder purchase that was “gamey?” I have a hard time believing that Chase would simply pull the plug, especially when it seems as if the cardholder is spending a great deal of money on the card, which is what they want, right?

    I’m not sure we have enough information to make an accurate judgement on who was right and who was wrong.

    1. My guess is they were large work purchases he’d normally have used his business account for. That or they allowed transfers to earn points and he moved over a large balance from his business account he had with them. In that second scenario, Chase would be gaining nothing while he was scoring major points. But I wouldn’t call that gaming the system as Chase created the terms and would have been balancing out cases like his versus additional revenue they’d get from the “new” money others would be transferring to them from elsewhere.

      1. Yes, but the OP’s original post mentions that “every single charge was authorized by Chase.” That leads one to believe that there were actual charges on the card and presumably the nature of those charges are what got the account suspended. So the theory about using it for large work purchases seems plausible.

        1. Can you point out to me specific to this particular product where it states you cannot use it for a business purpose. I challenged Chase directly on this. I also checked some other cards (personal) by other issuers. No such clause. Suspending the card was one thing. Attempting to keep the points, another issue. Most people will give up. I can only wonder how many did on this one.

          1. Robert: So you are saying that many of your charges were for business purposes, and Chase shut down your account because of that, but you say that the terms of service didn’t specifically prohibit using the credit card for business purposes?

            If that’s the situation, I wish we had been told this two days ago.

          2. Yes. These were actual business charges. I never disputed that with Chase. And the terms of service did not prohibit that. Since that time I have reviewed other card TOS as well. I have not found any language in any other card prohibiting this. They may try to use vague language like not used as intended without being specific in nature.

    2. You can find many more people like myself who had this issue as well. They do want you to spend, however this was a big promotion at 5 times points. At standard 1X they would not have cared a bit. I am sure of that.

  5. Silly Poll

    Of course a business isn’t going to sell you an item at or below costs.

    The more interesting question is what did the OP do. My money’s on he either used it for his business purchases, or figured out some sort of arbitrage.

    1. I suspect the same thing, too. That’s why they have Business credit cards (as opposed to personal ones). If that is the case, I do not agree with advocating for the OP. You game the system at your OWN risk.

      1. Have you checked out how much fine print there is in credit card terms? Chase totally defines the terms. It’s not gaming the system to do what the rules allowed. Without a doubt, it was somebody’s job at Chase to do the math on how much they’d lose in cases like the OP’s versus how much they’d gain from new customers signing up. It’s not the OP’s problem if Chase made a bad guess concerning that.

        1. I would rather the article be a LOT CLEARER what the OP did to garner an abuse decision by Chase. Not worth my time dreaming up more things this weekend.

        2. Actually the the definition of gaming the system. Following the rules to create an unintended consequence.

  6. Someone I knew ran all his business purchases through his personal card, linked to an airline, to rack up the points (he was a general contractor, so he had some pretty high ticket items). He’d sometimes make multiple payments each month to constantly free up the credit limit. He knew he was using it not as they “intended” it to be used, but did it anyway. He was would usually take one long weekend each month going somewhere, first class, with a different girl each trip.

    Regarding the poll, in his case…he certainly benefited more. Whatever he’d buy was used in the business to make a profit, he’d pay the balance with no interest accrued….and…..did I mention the girls? 😉

    1. My buddy did one better. He worked for a large company and part of is job was to handle the annual retreat which costs 100’s of thousands. He was given a corporate Amex card. With his boss’s permission he linked it to a frequent flier program and racked up almost 400k points, without spending a dime of his own money.

      1. Nothing wrong with that either. Do you know how much AMEX gets from the merchant fees. Possibly 12,000 in merchant charges alone.

  7. Both benefit if the card is used properly, so I didn’t vote. And I think Chase points are worth a lot more than that settlement. I wonder though about the “each charge was legitimate” claim – there are lots of ways to manufacture points that may not be detected at first, but which draw the attention of the company when done to such a vast extent. I would need to know a lot more.

    1. My husband and I each have a Chase Master card tied to Amtrak, and yes we have benefitted. We each got 12,000 points when we got the cards. Half the points the points for being approved for the card and the other half after our first charge. We only charge things we would buy anyway and pay the balance in full each month, also there is no annual fee. We have used our points toward travel on Amtrak and so far we are satisfied. Yes we know Chase benefits from us having and using the cards, but that is why they are in the business. They are not a charity.

      1. Exactly, you’re an excellent case of people who benefit from the opportunities these programs have to offer. Instead of just ranting about problems some have, Chris should advise his readers on how to use them well. I guess that doesn’t make for such bombastic headlines, though. He’s a good ombudsman, but every time he writes on loyalty programs he shows he really doesn’t understand them. Oh well, I’m looking forward to my next trip – thanks, Chase and United!

      2. Exactly! In a similar vein, I’m happy to take advantage of “no interest” financing for large purchases. But rather than pay the monthly minimum, I divide the total by the term and pay that amount each month, so there is no huge balloon payment at the end. The myriad folks who pay only the minimum, can’t afford the end-of-term balloon, and thus end up paying all that deferred interest help “finance” those of us who know how to play that particular “game.”

        1. you really have to be smart with your money. always pay off credit cards in full each month to avoid any interest fees

  8. You need another option on the poll – Just the credit card company. I’m willing to bet that the credit card company didn’t send that “penny” per mile to AARP in this case arguing that the points were not earned properly. I’m glad it worked out in the end though. There is a reason Chase has such a bad reputation when it comes to cards like this. This is just another example of how they earned that well deserved reputation.

  9. I keep waiting for Bank of America to close my credit card. I rack up around $1,200 in (mostly work) expenses each month and then pay it off each time I am paid. (My CC limit is also $1,000, so I have to stay on top of it to not go over my limit.) I haven’t paid interest on my credit card since 2010. I usually cash in my (minimal) points for Amazon gift cards. Am I playing the system? Yep. Will I cry if they cancel? Nope.
    I wonder if he paid any interest while accuring those points. I think that is what ticks CC companies off the most.

    1. There is a popular myth that the credit card companies call people who pay their balance every month “deadbeats”. That’s absolute nonsense. Every transaction you make on a credit card has a few percent fee that they get paid by the vendor. That is what is paying your rewards. But, they make quite a bit more than your reward. Yes, they make a ton of money off of interest for many users, but for someone like you or I who pay their balance every month the fee is even more lucrative. They borrow money for very little right now (like 1-2% a year) and they are loaning it to you for about 30 days with no interest. But, if they get a 3% fee from the vendor when you make that transaction, so they are making an average annual rate of about 36%, much more than they make from interest. So, don’t worry – they love you.

      I have no idea what this guy did. There are lots of tricks floating around to game the system, but mostly they cost someone else money. If you buy a gift card at CVS, CVS pays the fee, so the credit card company loves you. The coins trick was paid for by our government, thank you very much. For that card, it would require him to move over $200,000 in regular purchase through a “recently received” card (I think they pay 3 points on travel, but that still would be over $60,000).

      1. I never thought about the fee the merchant pays covers my “points” I acquire. That does make sense on why they let the people who don’t pay interest slide. Thanks for pointing that out.

        1. And the merchants pay a higher percentage of the transaction amount depending on what level of rewards you get. So, if you use a plain credit card with no rewards payed, the merchant pays the lowest percentage. If you use a card that gives you the maximum cash back, or a similarly expensive reward, the merchant pays an even higher rate. The card issuer wins every time.

          1. Merchants pay a fixed rate on transactions. Doesn’t matter what type of card the customer uses. The merchant pays the same rate.

          2. I can post the rate chart of you would like to see it. There must be at least 1000 or more possible rate calculations. The best merchant agreements are cost plus pricing. The merchants paying one flat across the board rate are being overcharged. Some are also getting ripped off for debit cards on a flat rate system. So Mark is right but the cost differences are fractions of cost. Cards rated as corporate cards are higher. AMEX is 3%. Master/Visa can be in the low 2% range or lower. Depends on some factors.

          3. “I can post the rate chart of you would like to see it. ”

            Yes, I would like to see that chart. And make sure it is a link to the card issuers website.

          4. I will try to locate the pdf file. I cannot give any link publically because I am not sure if that document should be public or not. Volume processors get cost plus pricing but merchant processors can be a tricky bunch. I can give you a direct contact who can verify this as fact. It is the most complex chart ever devised

          5. You said you could post it and now you are saying you can’t? Don’t bother with the PDF file unless it is through a link on the issuers website. Otherwise, it is suspected, just like your claims you have yet to back up.

          6. It is called interchange pricing. Look right here. I can back up any claim because I am not making any claim. This is fact. Would you like to bet me dinner on this? Just because you don’t know about something that doesn’t make it not true. I know ALOT about this area. Here is the website. If I post a document that I shouldn’t I don’t need the hassles. They will provide it to you on request.


            Pick up the phone and ask him what interchange pricing is. Also the rate chart would make you head spin and there is no clear understanding of it unless it gets explained to you. There are at least 1000 or more fractional numbers.

            Michael Mertz 877.894.2299

            I have no affiliation whatsoever to him other than a happy customer.

          7. Here is a link to the MasterCard Interchange Pricing…


            Now maybe I am reading it on, but I could not find anywhere in there that the merchants rate would change based on the card type presented. Whether the card has bonuses or not, the merchant pays the same fixed rate. Now don’t get fixed rate confused with fixed price. In MasterCard’s listing, it is a fixed percentage of the purchase plus a set fee. Nothing about if it is a bonus card or not.

            Now, did I miss something in that document?

          8. Regardless of the terms in that document you can check interchange pricing and see this is the case. Like I said there are thousands of calculations. Reward cards may be broken down in many many categories. One way merchant processors rip people off is a flat rate system. However small volume merchants will pay more. I have also caught my old processor overcharging us by huge amounts which were later refunded. Only refuded to you if you caught the overcharges.

          9. Also as I tell people most everyone has a reward card. Some sort of reward card. However these days there is alot of debit card useage. A flat rate provider would make a fortune from me because we get alot of debit cards.

          10. @Edb
            See my post above. One of the documents that links from the website you posted is the actual rate sheet. That rate sheet lists 7 card categories and the interchange rate varies between them. (PDF linked above). So yes a merchant does pay more based on card type.

          11. EdB,

            Here’s the link to interchange pricing:


            You’ll notice that it varies according to the merchant type, the card type and the transaction type (swipe / swipe with pin / MTO). This is direct from MC.

            In short, a merchant pays different rates based on the card type. MC breaks it down into 7 card types. Each type has its own rates that vary with the other two variables.

          12. I see the merchant type, transaction type, and general card classification. I don’t see where the rate changes based on a subtype of the classification. If I have a basic credit card, it might be a Consumer Credit Core Value and Enhanced Value classification. Are you saying that a card with a “consumer bonus” such as the cash back are going to be in a different classification? I’m really trying to understand this because my past experience has been that didn’t matter. Now my retail experience in dealing with was some time ago, so things may have changed.

            (And that is the same document on the link I posted to Robert just a few minutes before your post)

          13. @edboston:disqus,
            Yes but what you aren’t grasping is that each of the card categories is the base card that the bank then based the rewards card off of. Each of those 7 different card categories offers the card holder increased benefits and the bank gets increase funding … So the Chase MC United Presidential Business Platinum Card fits in the Customer Credit World Elite Category (I think). The difference to the merchant when I use it is 3.8% opposed to 2.95% for a vanilla MC card.

            So to answer your question… Yes, the banks fund the reward programs by moving the card into a higher category. I’m a MC merchant so its something I do look at but the MC rules don’t allow us to discriminate based on sub-card type.

          14. That is true to a certain extent. It depends on your merchant processor. I do a big volume of charges for my customers. I get charged some different rates. Most everyone these days has some sort of point generating card. The cost difference to the merchant on a points card compared to non is fractional. Very small. A debit card has a much lower cost now, but for many years it did not. There was a huge case on that (supreme court?) I think. This generally applies to MasterCard/Visa. Discover has low merchant fees and AMEX charges the highest merchant fees. AMEX is the highest rate points or not. The real money is the interest charges.

      2. It’s no “myth.” I’ve paid my balances in full every month for the past 20 years, but I figured the CC companies made enough from my purchases. A few years ago, however, I received a letter from BofA (which I got stuck with when they purchased MBNA) actually STATING that since I never carried a balance, they were going to start charging me $49/year for the “privilege” of using their card. I canceled the card that day and two other store cards that were connected with BofA.

      3. The credit card companies (Visa, Mastercard, Amex) probably make more than the banks. The banks supposedly get the majority of the merchant fee, but they’ve got far more bookkeeping and expenses than the card companies. Additionally, these days they try and stay competitive with affinity cards. The other nicknames are “cheapskates” and “30 day wonders”.

    2. They won’t. I have been charging anywhere from $800 to $12,000 a month to the same credit card since I was sixteen (I’m now twenty-nine), paying it off in full every single time and just collecting the points, and I haven’t heard a peep other than what a valuable customer I am.

    3. Those are small dollars. I regularly run a few thousand of monthly expenses through my card ($15k limit) and have never had a problem. The problem is when you’re doing very large transactions each month just to get points.

    4. No interest. By the way BOA wont close your account as long as you pay. Neither will Citi, AMEX, Chase etc. They wont care. Notice how I mentioned Chase. They don’t care. This promotion was a separate issue.

  10. I’m NOT saying the OP did this, but my guess is Chase was concerned about money laundering and that’s why they closed it. He must have been paying multiple times a month up to his credit limit each time to get that many points. Chase is probably concerned about this, not so much the points. I worked in this industry, and I’m pretty sure thats what is happening here.

      1. It has been done with pre paid cards (someone buys a huge quantity of card with a $500 or $1000 value with cash and then has friends cash them out), but a standard credit card sounds nearly impossible. But then there are people who are much more creative than I am when it comes to things like this. 🙂

        1. I must be missing something. If I take cash, buy 10k in gift cards, then sell them to my friends at face value, how do I benefit?

          1. You take cash that was generated through illegal activities and use that to purchase the gift cards. The cash purchases are done at multiple stores so as to not generate any blips on the radar for those watching these things. You then send these cards through the mail to co conspirators or use them locally. They use them to purchase various merchandise which they return for cash (I know, this breaks rules, but merchants don’t want to pay the fees charged to credit a card and if they are pre paid cards, they are usually auto closed when they reach zero balance so no account to credit back to exists). Therefore the cash now has a legitimately verifiable source. Since you don’t have to provide info on your identity when purchasing the cards, you can apparently move large amounts of cash this way. Sounds like way too much effort for me and I don’t really understand fully the benefit of doing this, but it apparently serves a purpose. Which is why when you cross the US border you now have to declare your pre paid card balances if they are high.

          2. I’m highly skeptical that actually works. The entire idea of money laundering to to create a “legitimate” albeit fake trial for the source of money. This scheme doesn’t do that.

            The classic example: you steal $100,000.00. You can’t just deposit it into your bank account because the feds will wonder where you got this 100k. So you go to Vegas and gamble for a few days, at various casinos. You don’t need to actually win, just break even. When you cash in, you ask for a check instead of cash. When you deposit the check into you bank account, it has a “legitimate source”. You can know claim it on your taxes as gambling winnings. You can see this scheme in Alfred Hitchcock’s “Stories to be read with the Lights on”

            Or you claim the ill gotten money as profits from your business. One scam I remember from the 90s was a criminal set up a small grocery store to launder money. He was caught because he never actually sold anything and a police officer happened to notice that all of the canned goods were dusty and past the expiration date.

  11. Chris, you told the original poster that it looks as if he found a way to game the system, but you don’t say what he was doing improperly. And you posted his full name and location here to cast aspersions on him. If he actually did something improper, you should say what it was, or in what way his purchases violated the terms of service.

  12. Chris, you must read the comments after each of your articles. I’ve seen you weigh in on the most trivial of comments. Here, everyone is just guessing and many of us would like an explanation as to what really happened. Unless we know, how can we learn from what occurred? Without more info, this article is just worth tossing into file 13 as meaningless written words.

    1. I think this is one of his “avoid affinity programs” things he posts from time to time. The OP cold have done something (whatever it was) similar with a cash back card having no affinity.

      1. I get it. He buys the gift cards using his affinity card. Is that allowed. I thought most retailers won’t accept a credit card for the purchase of gift card.

  13. so, what were you processing through your card to generate 200k in points? There are tons of schemes that people use to wrack up many many points such as buy coins from the feds, kiting money between merchant accounts and using the card in a way that’s not typical of an individual credit card account.

  14. I’ve updated the post with the letter Weisberg received from AARP about his account. It was Chase, not me, that suggested there was some funny business. I probably should have said that in the original story.

    1. This was your statement:

      “But when you figure out a way to game the system — which it looks as if you did — then the company can simply pull the plug on your point-collecting efforts.”

      Chris, your reluctance to answer the many posters who want to know HOW the OP gamed the system leads us to believe that your bias is showing here.

  15. Reading the update (“Chase has informed AARP Services that its closing of these accounts is within the guidelines”), it appears that the OP may not have been the only one who had his account closed. But it still doesn’t say anything more than Chase can do what it wants any time it wants to.

  16. I was wondering about how someone might accumulate that many points in a short period and run afoul of the credit card agreement. So, I did a bit of research. First, I found this in the Chase credit card agreement: “Your Account is to be used only for personal, family or household purposes.” It also specifically says you can use the card only for goods and services. So, what are some possible inappropriate activities? The first is gambling or any other illegal activity, which is specifically prohibited in the agreement. Those sites are likely blocked, but there are lots of ways the gambling sites have found to get around those blocks. Trying to get a reward on gambling deposits will get you nixed once they figure it out.

    But, the other activity that can get you nixed is investing. Yes, there are brokers who will accept a credit card. I was shocked! There are usually lots of strange stipulations such as paying back to the card or having to keep the money invested for some period, but if the OP was investing he may have been trying to pick up an extra 1% on his deposits. So, you deposit $10,000 in your brokerage and get 10,000 points (about $100). Even if you hold for a while, you can park in treasuries and take the money out later. Really unscrupulous people will take the money out as soon as possible and reinvest it again, a process called “churning”, but that usually does not last long before someone shuts you down, usually the broker. They then find another broker. Note that the fees are less for larger transactions, sometimes less than 1%. If this is what the OP was doing, he should be very careful. A common warning sign for unscrupulous investment activities is taking credit cards.

    Another activity that will get you nixed is using a personal card for business purposes. This is also prohibited in the cardholder agreement. A real problem here is that the person can skim 1% personally and off the books from their business purchases. That’s why there are specific “business” credit cards. The rewards can then be tracked to the business.

  17. I don’t think the letter from Chase explains anything we don’t already know. If the cardholder figured out a way to get these points legally then good luck to him! Seems all ended well anyway.

  18. Hello all! This article is about me. I can comment on the some of the posts I have seen here. I will try to answer as many of the comments or questions about this as possible. I think the article is fair because you can only cover so much. My dad read the article this AM because I did not know it ran yet.

    Addressing the program/charges. This AARP was a strong promotion for 5% points for all points earned for the first 6 months. This program was open to AARP members. Although I was not a member or old enough, I was able to legally join AARP. (Is that gaming the system) Furthermore I had full documentation from Chase as to what the program was, urging me to get “UNLIMITED POINTS”. I will address AARP and their lack of interest In my opinion.

    1. All my charges were real actual transactions. I called them legitimate charges. This means NO GIFT cards, no coins, no financial instruments like that whatsoever. I want to add that I do not believe there is anything improper about buying gift cards- UNLESS there is specific language prohibiting that. I have full documentation of my charges to prove all of this. I would have been prepared to take the thing to court had that been necessary.

    2. I was not alone with Chase freezing my account and taking the points. Many people had this issue. How far they took their complaints of filed formal complaints I don’t know. Many people talk a good game but are unwilling or bullied to not follow up. This was not an isolated incident to me or a few people. Many complaints

    3. My initial stance was they had every right to close my account, however not to keep all my points earned. I still take this stance.

    4. @Joe- Chase paid me the points because possibly they were convinced I would take this to court. I did file formal complaints with the CFPB. That agency is very aggressive (IMHO)
    I did not game the system. I don’t think that impression is in the article.

    5. @Cybrsk8r:disqus I would be more than happy to provide all charges and prove that nothing was a cash advance or gift card, no cash instruments, coins or otherwise. Chase responded to me “not used as indented” they never were specific in writing or on the phone. In court they would have to define what that was. My opinion is that I simply earned too many points in the program.

    6. @lostin travel They didn’t think people would rack up the points is correct (again in my opinion)
    Those who earned far less points did not get their accounts closed from what I heard.

    [email protected] and others. I have business and personal credit cards. I have also read all the terms and conditions line by line about this particular card. There is no Language prohibiting business expenses to be charged to this or any personal card that I know of. You should be aware that there are a very small subset of actual business cards. All business cards are based on your personal credit as well. Pick up the phone and call AMEX for example. Ask them if you can charge business items on your regular card.
    @Tony The bottom is I earned a lot of points. So did others. There is no legal issue with using a personal card for business expenses. There is no legal issue using a business card for a personal purchase either. In my 30 years of business-NO card company ever has any disputed, question, issue or otherwise with any business expenses charged on a personal card. Don’t employees of companies get reimbursed for business expenses. Are those charges illegal if charged to a personal card?

    In my case gaming the system meant earning a lot of points. Many card companies offer little or no business card products. I read every line of mice type in this package from Chase. It never says no business transactions. Also you must realize that EVERY single charge was approved by Chase. When you get an approval, those are approved charges. At any point they could have stepped in. They waited until the points were posted and the account paid in full to take action. Is that in good faith?
    @markkelling. No gift card were ever bought. No conspiracies or anything like that. In the past few years Chase has been in the news quite a bit. Maybe that will give insight as to their general behavior.
    @Edb Good comments.

    AARP got many complaints about this program. I view them as a quasi lobbying group. Their behavior is shameful in my opinion. The way I read their response is that whatever Chase says is right because they can never be wrong. Thanks but no thanks. This is a little more than a product endorsement.

    I am very knowledgeable in the point promotion area and I until this situation I never heard of a bank closing accounts and keeping the points. Unless, you don’t pay the bills. I can tell people that in general a small number of people do well with these point programs. Somebody mentioned about McDonald’s spending and such. People with credit spend more there. Those sort of things mean nothing to me. Cards don’t force you to spend more. People may make bad judgments.
    I know so much about these programs that with minimal effort anyone can score a nice trip to Europe business/premium class, nice hotels and more for close to zero out of pocket. Anyone with A credit or A+ that is. Point programs are bad for anyone not paying every bill in full at the end of the month.
    I am not sure what to state other than to a certain extent leaving many points in these card programs carries some risk. Maybe more than frequent flier accounts where the redemptions get raised and points devalued all the time.

    Last Words: As I state earlier I have been involved with point promotions for a long time. I understand currently there is a similar situation right now with Citibank. (I am not involved) with this problem at all but it involved a 5% promotion at grocery stores and drug stores and customers may have bought gift cards and such to increase their point totals. I am convinced that due to the huge size of these programs, there needs to be protections to those who earn the points. If they want to cap the points, then due so.

  19. What is this story about? What did the guy buy to create the points? Is this just an excuse to publish an opinion that some people aren’t capable of using an affinity credit card, so they should be banned for all of us? This mentality is becoming increasingly obvious … “someone” has to take care of the poor dumb people so they don’t hurt themselves. Rubbish!

  20. Maybe some people think gaming the system is earning points and perks and paying the bill in full month to month as should be done. Carrying interest at 10-15-20% or higher is crazy. Especially now when lenders can get money for almost nothing. They assume payment risk.

  21. Well, since the cardholder was compensated for the points taken from him, this is pretty much a moot point now. I despise the idea of credit card points being confiscated with little explanation though and I think the OP deserved every penny of the $2400, and then some. “Not used as intended”… what does that mean? The credit card company needs to explain better, if every charge by the cardholder was legitimate… he honored his part of the card agreement, they need to honor theirs.

  22. There was one very important fact I completely left out. Anyone who doesn’t believe this I can fully document this. As soon as I got the notice of closed account/we are keeping the points, Chase discontinued the 5X points. The offer for 5X points was taken off the card application process. Does anyone think this was just random. Others like me had about 1 month or so left on the 5X. It was a good way to close things down.

  23. Chris, I wish you had been a bit more skeptical before taking this case. We have been activity using rewards on credit cards for years now. We juggle 6 different credit cards and have been earning about $50 per month on average. We are doing entirely normal purchases, taking advantage of the rotating programs, discount on services, etc, that these providers offer. We pay all balances every month, so we have never paid any interest. We have never bought anything to get a reward. We are pretty much using the programs for exactly the purposes intended, getting basically a 5% discount on all groceries, gas, and other categories. We are doing home renovations this month, so we are careful to put Home Depot on the Citibank card because that earns 5%. Is it a pain to juggle that many cards and keep track of which to use? Yes, but we figure it is worth it for about $600 a year in free money.

    But, all this is at risk because of the people who figure out ways to game the system, and I have no doubt that the OP is one of those. Even if he had the AARP 5% card, accumulating >200K point would require $40,000 in spending and you don’t do that with normal household purchases. You routinely rail against the people who do mileage runs, buy coins for points, and other tricks to earn frequent flier miles. This is the same thing. They buy gift cards and other tricks to churn money through these accounts. The net result is that vendors are dropping some of these rewards programs, which will cost those of us who use them as they are intended in the long run.

  24. I was wondering what could qualify. Way back when I was going to grad school and my folks paid for my education. The school accepted credit cards, and pretty much my parents used one of the first big affinity cards, the GM Card, which offered various plans, including the platinum one with a higher cap per year (might have been $5000 from the normal $3500). Eventually they applied this to a sedan, where they only paid about half the price after using the GM Card credits.

    I’m wondering if this might have been considered an abuse back then. I don’t think so, since this was for a personal and not business expense.

  25. The only thing that comes to mind of why Chase may have not given the client the miles is if he used a consumer card to make business charges. That is normally in the small print about not allowing a consumer card to be used for that purpose. Lots of people use cards that way,lots of card issuers allow this practice…..but they can technically pull rank if they want because it is in the terms and conditions. I am confident that is probably what happened.

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