'manufactured Spending': How A University Student Racked Up Travel Rewards

Just read this via URL on the other site.

I can understand, when people using some "loopholes" for the small profit here and there.

But in this case...would send this guy to the mandatory works, somewhere very far (he deserved free flight), to pay-off the expenses that he caused.

This comes up from time to time.
Was a guy in the UK who was doing this with commemrative high FV coins, and then the banks stopped taking them.
IMO, one camnot pass instant judgement on people who choose to act this way. Determining what is ethical behaviour is not a science.

Read the comments after the article. Half of the people think he is a crook and the other half think he is a hero.

The loophole, of course, was you could earn points/rewards by buying the coins and returning them to a third party, ie. the bank for a refund. Note you could not keep the points if you bought and return the coins to the RCM. Similar to buying a TV and returning it to the store you lose your points.

This is one guy who came forward with this story, there must be hundreds or thousands of others doing the same thing. No wonder the Mint cancelled the FV program after losing money.

Nothing unethical about them figuring out a flaw in the program design. The airline guy didn't steal from anyone and the airline offers those reward points on their own.

Releasing the X4X coins through the banking system would have resolved all the issues.

--> Cash only, no CC points involved
--> Banks get the goodwill, new clients maybe
--> No rep commissions involved, less greed
--> Fewer redemptions - obviously
--> Attract collectors, not speculators

I can't fault the ones who saw an opportunity to collect travel miles. I do fault the RCM for failing to execute on a really good idea.

Not really, you still have to look ahead and avoid the same mistake.

Here is an video of the law student, Avery Campbell, explaining "Manufactured Spending".

http://www.ctvnews.ca/video?playlistId=1.3680016

Apparently the FV coin program is only one aspect of "manufactured spending". He and another group of people do this on s regular basis with other things. So the free 1st class ticket, hotel stays, etc. are not only from the FV program but other spending.

From the article:

"There is a large manufactured spending community online, but much of it is hush-hush. Manufactured spending is frowned upon by merchants and credit cards because it's not the way loyalty programs are meant to work. There are inherent costs when someone manufactures spending, such as handling or administrative fees, which are often incurred by the merchant"

Campbell, who said he's aware of another "really large program in Canada that's ripe for abuse," admitted that manufactured spending does come at a cost to someone.

"Companies want to make profit," said Campbell. "Manufacturing spending hurts their bottom line. Someone has to pay for it at the end of the day and usually it's the seller of the product. And other purchasers of the product who aren't doing manufactured spending have to subsidize for people like me."

Actually, the equation works more like ZERO bucks to gain 100 dollars of air miles.

And if it can be done...