AMEX rejection

[serfty]

Anyway, it's ok to have a different understanding of where to play between spirit of the law and letter of the law. But my hope is most people stick closer to the spirit.

I do not believe law comes into it with specific consideration of churning credit cards to gather multiple sign up bonuses. Neither "spirit" nor "letter". *

This is purely a commercial relationship between the credit card providers and its current / prospective customers.

* Law may be a consideration in respect to prospective customers who provide false information with their application but that is definitely not relevant to this thread.

 

[Waddygib]

OK last try from me and then I'll get off my high horse:

Amex is making a good faith offer to prospective customers. The obvious intent is that anyone taking up the offer stays on board for an extended period in order for the relationship to be profitable for both sides. Obviously there is no contractual way for Amex to enforce this so they have to trust that most people understand that commercial relationships are a two-way street, while also pricing for the small number of people who take advantage. (This is why churning is, in fact, taking away from other customers).

If you churn relentlessly, you KNOW you are going against the intent of the offer. Of course it is 100% legal, but my point is that if eveyone behaved like this there would be no sign up offers at all.

For me, a good commercial relationship creates value for both sides. If you play so hardball that you take all the value (and then some) for yourself, I think not only is that bad long term business, it is selfish the point of acting like a d*ck.

Now back to the topic at hand: if you get the letter saying it was due to something in your bureau, it means you are identified as a churner (or "gamer" as they call it internally) and they have every right to decline to do business with you. Going to AFCA? That's not playing the game hard, either, it is taking advantage of what is supposed to be a watchdog for legal breaches but using it as leverage, not a remedy.

 

[levelnine]

Amex is making a good faith offer to prospective customers.

Whether you like it or not, people will game systems. That is the nature of humans. You're never going to be able to stop it.

Indeed, there are people gaming Amex way, way harder than Dr Ralph. They just don't disclose what they're doing in public forums.

 

[Waddygib]

I'm not expecting to stop it, or denying it happens. I'm just saying it's the wrong thing to do, and I hope my kids grow up to be the kind of people that don't take advantage of others in this way. Sure Amex can afford it, but as a general way to behave in society I think it is abhorrent.

 

[MELso]

My view is churning is fine (the offer is there, so why not take advantage of it?), and if you want to repeatedly try, well... okay.

But lodging frivolous or vexatious complaints about a clear commercial decision to refuse credit isn't okay as this ties up resources dealing with your whinge that could be used to help those facing genuine hardship arising from problems with their finance providers.

 

[MooTime]

We don't have to worry about our children being these terrible churners as the way it's all heading opening and closing multiple credit card becoming more difficult with 18-24 month exclusion periods for sign up bonuses
And who knows what's next

 

[Human]

I'm most definitely in the camp that believes that it's not just about "Law" but about "ethics" -- what's right and what's wrong.

Something might be legal, but still unethical (eg. putting down colleagues at work in order to get a promotion).

The interesting thing about churning and the credit card game is that everyone has different views about what's ethical (right) and not.

One example:

I'm very happy to churn cards. That to me is both legal and ethical (but it's not ethical to many others I know, so they don't do it).
There are some cards that in the past (and maybe still today) have/had loopholes where you can pocket the bonus points and cancel the card before paying the annual fee.
Many people on AFF have done that and they consider it both legal and ethical.

But I would never do that. Taking the bonus points without paying for them might be legal, but to me it is not ethical.

Nevertheless many AFFers have a different opinion on that, and that's OK.

Deep down, though, I think we all recognise the principle that just because something CAN be done doesn't always mean that it SHOULD be done!

 

[Chrizztofa]

Fascinating discussion and I'm following this thread with great interest.

Some random (inexpert) thoughts:

1. Ultimately this seems to come down to whether a business can legally refuse service to a member of the public (so long as they don't breach anti-discrimination laws).

2. DrRalph's position seems to be that Amex is discriminating against him because they have no valid reason to deny him service - he's met all the T&Cs from his previous dealings with other financial institutions (it's not clear if he's dealt with Amex before) and there are no adverse (default) events from his credit report to suggest he'll breach the T&Cs with Amex.

3. I imagine Amex would take the view that they are entitled to choose their customers as long as they are not clearly breaching anti-discrimination laws (age, gender, race, disability etc. which don't seem to apply here). Or perhaps they could run the argument that they are merely providing an 'invitation to treat' to the public, as opposed to a formal contract offer.

4. Surely Amex would prefer not to be pinned down to specific reasons for refusal which is open to interpretation by agencies / courts. I suspect DrRalph will be unsuccessful in getting the answers he seeks from Amex regarding formal reasons for rejection and a definition of churning. If Amex were compelled to do so, it would open up all sorts of challenges from people declined by financial institutions. Not sure anyone at financial institutions or AFCA would want to deal with those issues on a regular basis so there would be intense lobbying to preserve the status quo.

5. I agree with the commenters that contend that financial institutions should be bound by the T&Cs they disclose, and if there are loopholes then people are entitled to use them (spirit of the law is so subjective and hard to define). However, I do also accept the points made that if DrRalph is successful in his argument then others will lose out - financial institutions would change the 'rules of the game' to close the perceived 'loophole'. Other potential customers would be faced with either fewer bonus points or additional requirements to earn them. So it may end up being a victory for DrRalph and a defeat for everyone else!

6. Having said that, regardless of DrRalph's submissions, we are already starting to see the rules of the game change. Some cards only granting some of the bonus points after payment of the second year's annual fee, and there may be potential further changes following the RBA review on interchange fees.

 

[kpc]

Dr Ralph has bragged over the years about his churning of credit cards for the bonus points and how it didn't affect his credit rating. Now Amex have woken up to this and keep denying him an Amex which is obviously a commercial decision they have made. He should just move on but I guess it is his right to complain...I'm sure no one at Amex is listening!

 

[andyrb]

1. Ultimately this seems to come down to whether a business can legally refuse service to a member of the public (so long as they don't breach anti-discrimination laws).

Any business can refuse service to anyone, for any legal reason. This includes it not being a viable (or perceived viable) transaction/relationship.

Surely Amex would prefer not to be pinned down to specific reasons for refusal which is open to interpretation by agencies / courts. I suspect DrRalph will be unsuccessful in getting the answers he seeks from Amex regarding formal reasons for rejection and a definition of churning. If Amex were compelled to do so, it would open up all sorts of challenges from people declined by financial institutions. Not sure anyone at financial institutions or AFCA would want to deal with those issues on a regular basis so there would be intense lobbying to preserve the status quo.

This is exactly why the rejection letters from any credit provider is somewhat generic.

Unless someone has a very compelling case of clear discrimination or actual procedural error, AFCA is not going to be useful in forcing further information or changing the outcome.

In this case, it appears Amex have made a business decision not to offer a card - as is their right to do so.

It's unfortunate that many people seem think an industry ombudsman is there to be used whenever they can't get their way. Some seem to take all complaints and manage appropriately; others (like AFCA) appear to filter out the frivolous ones.

I previously worked for a company in the telco space and often dealt with customer complaints (including resolution). We weren't required to be a TIO member, nor were we. However, the number of people who'd scream "I'M GOING TO THE OMBUDSMAN!" whenever they were told something they didn't want to hear was highly amusing. I'd say maybe only 10% of the complaints I dealt with had a legitimate grievance; the rest were just people having a sook because they were unhappy or annoyed.

 

[andyrb]

I also just had a read through the Membership Rewards T&Cs.

Fraud, abuse, selling or gaming relating to the earning of Points in the Program or redemption of rewards, including transfer of Points to participating Partner Loyalty Program, may result in suspension, forfeiture of Points as well as cancellation of the Program Account or Card.

This talks more about post-card activation, but I would suspect it would apply to any sign-up bonus offered.

https://www.americanexpress.com/content/dam/amex/en-au/company/terms-and-conditions/AME12313_MRTCsDoc-Consumer_FA.pdf

 

[Happy Dude]

I also just had a read through the Membership Rewards T&Cs.

Fraud, abuse, selling or gaming relating to the earning of Points in the Program or redemption of rewards, including transfer of Points to participating Partner Loyalty Program, may result in suspension, forfeiture of Points as well as cancellation of the Program Account or Card.

This talks more about post-card activation, but I would suspect it would apply to any sign-up bonus offered.

https://www.americanexpress.com/content/dam/amex/en-au/company/terms-and-conditions/AME12313_MRTCsDoc-Consumer_FA.pdf

I think we can all be sure that the reason for Dr Ralph's rejection, even if it hasn't been specifically acknowledged by Amex, is the number of credit hits from other providers.

In relation to receiving or earning sign-up points, Amex have put time limits in place for "new" applications which effectively defines what they see as acceptable in terms of churning their cards. They've set rules.

Therefore, that clause won't apply to a "new" application made by someone who has not held a card since the stated exclusion period. Your suspicions are not justified.

Presumably, for someone having fewer than [some number of] hits on a credit file, and that meets all the other requirements/conditions, Amex would approve applications and provide any rewards they offered as part of that application. Have a poke around here and I reckon you'll find numerous relatively recent reports of successful applications, but my guess is they won't be from hopefuls with frequent/regular hits on their credit reports.

 

[Waddygib]

Amex WANTS to approve as many applications as possible. Management monitor approval levels very closely (among other things, if they drop too low they need to take documented action - learned an expensive lesson about that in their david jones shenanigans).

They have sophisticated risk modelling that means only very few declines happen due to their concerns about default risk - generally speaking they are confident (with good reason) that most card members do not default. Even having defaults on your bureau will only matter if the model decides (in combination with all the other factors) that you are a risk of another default.

Most declines happen due to a regulatory criteria not being met (debt capacity or income verification). The only other reason a decline will generally happen is churning. And they are absolutely entitled to use that as the basis for their decision! Over time, I think you'll see all the issuers start to do the same thing. They probably would already, as it's not particularly complicated to identify a churner from their bureau, but most other issuers have only limited resources to build the necessary decisioning engine as the cards business are only tiny parts of much larger institutions, are loss-making drivers of customer engagement for cross-sell purposes.

 

[levelnine]

I'm just saying it's the wrong thing to do, and I hope my kids grow up to be the kind of people that don't take advantage of others in this way. Sure Amex can afford it, but as a general way to behave in society I think it is abhorrent.

The only other reason a decline will generally happen is churning. And they are absolutely entitled to use that as the basis for their decision!

So it's okay for Amex to maximise their profit but it's 'abhorrent' for churners to maximise their profit?

 

[DC3]

Fascinating discussion and I'm following this thread with great interest.

 

[Waddygib]

So it's okay for Amex to maximise their profit but it's 'abhorrent' for churners to maximise their profit?

So it's okay for Amex to maximise their profit but it's 'abhorrent' for churners to maximise their profit?