TMM1982

Yes, you got caught with your hand in the cookie jar. That is what's going on.

Troopers

In other words...your VGC spending activity is frowned upon by Amex. Is the total spend appropriate with your stated income(s)?

mia

This is called a Financial Review. Scroll back to read other experiences and opinions.

American Express is more interested in the amount you are spending than what you are buying, but they do regard gift cards as an increased credit risk because they are easily convertible to cash.

PDX2SF

Not sure what this means, exactly. Whether I spend my money on groceries, entertainment, bills, or VGCs, is really a matter of personal choice.

And yes, my income supports the amount of spend on the card.

Thanks for those who pointed me to the FR process. Hopefully this will just blow over.

TMM1982

Opening up a bunch of cards and simply meeting spend by going out and buying a whole bunch of VGC's is not going to endear yourself to any major bank. Even if you survive the FR by AMEX, take this to heart.

mia

If you do not submit the 4506-T by the deadline they will close the accounts.

United747

The problem is that buying large amounts of vgcs is in and of itself, suspicious to banks and retailers. For all they know, you're using the credit card as an ATM (I'm not at all saying you are doing so). So many times when they see large amounts of gift cards being purchased, they take a closer look. Hence the financial review.

There are also money laundering issues with it.

Irish80

Sorry, but I disagree. There is no money laundering issue with buying gift cards. Amex may not like it (and I tend to think that this person's FR was, as Mia suggested, due to the amount spent and not that he bought gift cards), but it's nothing at all related to money laundering.

As an aside, I purchased several thousand Amex gift cards from them to meet spend on my Platinum card and they had no issue whatsoever with the purchase.

TMM1982

I agree there is no money laundering for gift cards bought with credit cards. Money laundering would be more apt if someone bought VGC's with a stack of hundreds (from any sort of illegal business like drugs) and then loaded the VGC's onto their Serve, and then sent that money back to a bank account of some kind.

PDX2SF

And it's not as if I haven't paid the previous Amex bills, so Amex *should* know that I can afford this level of spend (if only they knew how much MORE I spend on my Chase cards...or do they?)

Troopers

It's not your money, it's on advanced credit granted by Amex. If they don't like how you use the credit, they will take it away.

Doesn't matter...it's not you; it's not personal.

greg99

I can tell you from knowledge of AmEx's compliance strategies around money laundering, that gift cards *are* a matter of significant concern for them (and other credit card issuers, not to mention the U.S. Treasury Department), as there *is* enhanced regulatory enforcement risk when gift cards that are directly exchangeable for cash are involved.

Does that mean that everyone is going to get FR'ed just by doing gift card purchases? No. But it makes it somewhat more likely that they're going to scrutinize that person's transactions.

Greg

jsk1973

There's a plain money-laundering risk with gift cards: Person A buys gift cards on credit and then sells them for cash to (criminal) Person B.

Irish80

I'm sorry but I disagree that Amex is that concerned with gift card purchases because of money laundering. They push them all the time and they are one (or were) one of the biggest sellers of gift cards in the industry and clearly allow the purchase of large dollar amounts of their gift cards with credit cards, including their own credit cards. If it was so much of a concern for them then they wouldnt allow their own cards to purchase the gift cards from their site. The purchase of gift cards is not now nor ever has been money laundering. Far too many people push that notion and its just not true. Real money launderers would laugh at the notion. Money launderers 'launder' their money by funneling illegally obtained cash into legitimate businesses and other sources to hide that cash. They certainly don't use credit cards to do so.

The reason that Amex and other CC companies are concerned about the amount of gift card purchases is the amount of rewards that they give out for the credit cards being used. That's why they would ever scrutinize the purchases, not money laundering.

jsk1973

Amex probably doesn't mind direct sales of its own gift cards because it knows its own gift cards are far less easily convertible to cash, especially for purposes of manufactured spending.